Is The High-End Market Making a Comeback?
Through the first four months of 2013, 16 leases were signed at $100 per square foot or higher. Okay, so four deals per month does not seem like much, but as only 23 such transactions occurred in all of last year, this could be the start of a trend. If this pace keeps up, the market could post more than double the number of high-end leases signed in 2012.
But I suspect it will increase even more.
Back in 2007 and 2008, when these top-tier spaces were in high demand, an average of 92 deals over $100 per square foot per year were completed, so more than a doubling of last year’s total does not seem out of reach.
It’s no surprise that the usual suspects leased the $100-per-square-foot spaces, with financial and legal services accounting for all of the activity: financial firms leased 14, while law firms leased the two others.
And the same buildings within the Plaza District along Park, Madison and Fifth Avenues are the buildings achieving these high rents, with one building on Seventh Avenue and Avenue of the Americas getting into the mix.
Adding to the trend is the recent success of Midtown, which posted almost 899,756 square feet of positive absorption in April and wiped out almost all of the negative absorption from the first quarter of this year.
More than a third of this positive absorption came from Class A Plaza District buildings, with 319,688 square feet posted last month.
With the Plaza District improving, availability is down from 12.9 percent at the end of last year to 12.3 percent, and there are enough signs to think more $100-per-square-foot starting rents are on the way.