Manhattan Office Leasing Activity Up
The Manhattan office leasing market experienced a jump in activity of 19 percent year-over-year from February 2012, according to the March 2013 Manhattan Marketview Snapshot from CBRE. Leasing activity was also up nine percent over January 2013, the report noted.
“February leasing remained below the 60-month monthly average, so the increase in activity compared to one year ago at this time signals an improvement of the market,” said Matt Maison, Manhattan manager, research and analytics at CBRE.
The overall availability rate in Manhattan rose 20 basis points in February to 12.5 percent. Average asking rents rose two percent, or $1.12, to $60.56 per square foot, representing an increase from February 2012, when average asking rents were $54.40 per square foot.
“Although these are positive indicators of continued market improvement, it is still yet to be determined if the trend will continue throughout the year,” Mr. Maison cautioned.
In Midtown leasing totaled 830,000 square feet, 27 percent below the five-year monthly average. With large, new availabilities coming to market, the area’s absorption increased to negative 1.32 million square feet year-to-date. However, for the same period last year, negative absorption was more substantial, at 1.59 million square feet. Average rents rose two percent in February to $68.94 per square foot.
Major new availabilities in Midtown included AXA Financial’s sublease at 1290 Avenue of the Americas, representing 254,000 square feet and 159,000 square feet of direct space at 730 Third Avenue, the CBRE report noted. The neighborhood’s top lease transaction was Macy’s 646,434-square-foot renewal at 11 Penn Plaza, as reported by The Commercial Observer last month.
“With the addition of a few large blocks of space, the market weighed heavily on the availability rate and net absorption total for the month,” Mr. Maison noted of the Midtown market. “The average asking rent continued to recover toward the levels measured prior to the market downturn and areas such as Park Avenue and the Plaza District remain desirable to high-end tenants.”
Leasing activity in Midtown South increased from below-average levels of the previous three months. Activity was close to five-year monthly average of 330,000 square feet, according to the report. However, year-to-date leasing was behind the same period last year by 15 percent. Large availabilities also impacted the Midtown South market, causing a 40-basis-point increase in the availability rate. Average asking rents dropped $0.50 per square foot during February, as new availabilities were priced below market.
Downtown experienced a strong February, with 580,000 square feet of leasing besting the five-year monthly average of 340,000 square feet. Through the first two months of 2013, leasing activity has nearly doubled from the same period in 2012. The market’s availability rate for the month dropped 20 basis points.