So what’s the big deal?
Well, for one thing, these 25 leases and lease renewals account for 5,911,356 square feet—42 percent of the total leasing volume in 2013. Large transactions fuel leasing activity, and with 14.03 million square feet transacted through May, the market is poised to surpass last year’s total of 30 million square feet. Since early 2009, when only 15 leases were completed, activity on big blocks of space has been gradually improving each year. The 25 leases signed through May is the strongest start to a year since 2005, when 26 large deals were signed. Since then, an average of only 19 leases were completed north of 100,000 square feet during the first five months of each year.
Of this year’s 25 leases, 10 were renewals and four were renewals that included expansions, continuing the trend of an increase in renewal activity. Renewals have accounted for 41 percent of the total leasing activity in Manhattan so far this year. In these 25 significant transactions, six media/tech firms and six financial services firms led the way, followed by five professional services firms. Midtown accounted for 15 of the 25 transactions, nine of which were renewals. These large transactions are just another indication that Midtown is heating up, and activity has helped drop the availability rate in Midtown to 11.6 percent in May, down from its peak of 12.2 percent in March.
Despite the increase in large lease signings, there are still 91 contiguous 100,000-square-foot blocks of available space on the market, including buildings under construction. But with the traction the market has been demonstrating, expect some of these blocks to get absorbed as the predicted number of large transactions nears 60 by year’s end.