Midtown Average Asking Rents Experience Largest Dip Since 2010

In March, Manhattan Class A direct average asking rents dropped $0.19 per square foot. It’s only a mere $0.19, but the bulk of the decline came due to an $0.85-per-square-foot drop in Midtown Class A average asking rents.

The decrease was the largest since 2010 for Midtown Class A space, and represented the second consecutive month of declines. The $0.98-per-square-foot decline over the past two months is indicative of the shift in demand for space throughout Manhattan. At 22,036,093 square feet, available Class A Midtown space surpassed 22 million square feet for the first time since—you guessed it—2010.

98Cents_DropinRentAs more space hits the market, additional downward pressure is placed on asking rents.

Five out of the nine submarkets in Midtown contributed to this Class A rental decline, with the most notable declines from the more expensive submarkets. Asking rents in the Fifth/Madison, Park Avenue and Sixth Avenue/Rock Center submarkets all decreased in March. Park Avenue may just be a statistical anomaly, as the availability rate is solid at 10.2 percent, but the other two submarkets continue to add space to the market.

In Sixth Avenue/Rock Center, the 413,000 square feet of negative absorption posted this year led to a 90 basis point increase in availability, to 14.5 percent. The addition of space in this submarket has pushed Class A asking rents down $1.29 per square foot over the past month, to $79.29. Fifth/Madison is the most expensive office submarket in the U.S., but in March, Class A asking rents nudged down $0.35 to $100.96 per square foot. Demand for top-of-the-market space has cooled the past 12 months, as is evident in its 14.9 percent availability rate.

But not everything is bad in the market. After all, Manhattan Class B space continues to soar—average asking rents were up $0.46 to $49.16 per square foot in March.

Richard Persichetti is the vice president of research, marketing and consulting at Cassidy Turley, with 14 years of NYC research experience.

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