And the Awards Go To…
Are you ready for some football?
The National Football League kicks off its 2013 season this Thursday as the defending Superbowl Champion Baltimore Ravens take on the Peyton Manning-led Denver Broncos. In the spirit of the start of a new NFL season, I figured I would hand out some football-themed awards for the Manhattan commercial real estate market through the first eight months of the year.
The comeback player award goes to Midtown. Midtown has been watching the Midtown South availability rate drop steadily since 2011. But this year, Midtown has finally made some first downs, as its overall market availability rate dropped 60 basis points since the end of last year to 11.2 percent through August—the lowest it has been since 2008.
The rookie award goes to the Fifth/Madison submarket. In the beginning of the year, Cassidy Turley reorganized its submarket boundaries and created six new ones. Of those six, Fifth/Madison has performed the best. This submarket’s availability decreased 180 basis points to 13 percent since 2012, while its average Class A asking rents surpassed $100 per square foot, up 11 percent to $106.86.
With the overall market performing well, it was tough to pick just one most valuable player, so the co-MVPs of this year through August are Manhattan Class A absorption and Class B asking rents. Manhattan Class A absorption totaled positive 748,031 square feet so far this year, which was led by Midtown’s 1.1 million square feet of positive absorption.
With Class B space in higher demand over the past two years, Class B asking rents have been increasing faster than Class A. Manhattan average Class B asking rents soared 12.1 percent this year to $52.65 per square foot. Although higher at $69.18 per square foot, average Manhattan Class A asking rents are only up 1.8 percent since last year. As demand for Class A space increased over the past eight months, expect asking rental increasing to speed up over the next six to 12 months.
So strap on your helmet and shoulder pads, and get ready for a promising NFL season and an exciting fourth quarter for the Manhattan office market.