Through the first seven months of 2012, the Class C segment of the Manhattan office market has been responsible for 90 percent of the net absorption. Class A has had a bit less than 30,000 square feet of net absorption, while Class B has had approximately 128,000 square feet.
Class C rang in at just over 1.4 million square feet. Midtown South, with Class C absorption at 831,000 square feet thus far in 2012, has been the primary reason for the big number at the lower end of the scale, with leasing activity strong from tech/media firms. Another reason has been Midtown, where Class C net absorption now stands at slightly more than 546,000 square feet.
This is thanks in large part to the Penn/Garment submarket (which made up almost the entire Midtown figure) and its expanse of older stock at discounted prices (at least compared with the rest of Midtown). Tenants who are new to the market and start-ups looking to keep expenses low are heading to areas (and buildings) where there are still significant savings to be had. The total takeup of space remains rather dismal year-to-date, at just under 1.6 million square feet for all classes of space.
That is only slightly behind last year’s pace of two million square feet at this same time—though back then, the Class A segment made up 87 percent of the net absorption. What a difference a year makes.
Robert Sammons, Cassidy Turley