The Midtown South availability rate was stagnant in the first quarter of 2013 at 9 percent, but it still remains the lowest of the three Manhattan markets.
Of the five submarkets in Midtown South, three have experienced declines in availability this year. Meanwhile both the Flatiron/Union Square and Hudson Square/Tribeca submarkets had four large blocks of space 50,000 square feet or greater added to the market, which pushed availability higher in these areas.
The Chelsea/Meatpacking submarket continued to shine as availability tightened and asking rents increased in the first quarter. At the end of last year, the availability rate in this submarket was a healthy 8.9 percent, and with a slew of recent leasing activity, availability dropped 200 basis points to 6.9 percent in the first quarter.
At 6.9 percent, availability in Chelsea/Meatpacking is the lowest out of the 19 Manhattan submarkets. The drop in available supply was led by Google’s aggressive expansion within Chelsea. The tech giant expanded into 95,000 square feet at Chelsea Market in the fourth quarter of 2012, and in 2013, after administering free public wifi to Chelsea earlier in the year, Google leased another 85,000 square feet in the building. All in all, it was a strong quarter for Chelsea/Meatpacking, as an additional 10 leases signed between 10,000 and 20,000 square feet contributed to the positive 355,184 square feet of absorption for the submarket.
Pricing in Midtown South continued to climb in the first quarter, as overall asking rents are up 3 percent to $57.60 per square foot. Midtown South is the only market in which average asking rents have surpassed their historical high, which is 16 percent higher than 2007 asking rents.
Richard Persichetti is the vice president of research, marketing and consulting at Cassidy Turley, with 14 years of NYC research experience.