How tight is Midtown South? A simple answer to that question is the market is very tight and considered to be below equilibrium.
With an availability rate of 8.7 percent and asking rents at historical highs for both Class A and Class B space, the market is in high demand. Digging into the numbers further shows that 35.25 percent of Midtown South buildings are fully leased. That percentage may not seem like much, but compare that to Downtown’s 25 percent and Midtown’s 23 percent, and you will see that Midtown South is pretty significantly outperforming the other markets.
Taking a deeper dive into Midtown South’s available supply shows that of the 7.5 million square feet of available space on the market today, only 1.6 million square feet is available on a sublease basis. Over the last two-and-a-half years, tech start-ups have exploded all over the Midtown South scene, and, as this industry tends to favor short-term sublease space, there are few opportunities in the area. With the majority of start-ups focused on space under 10,000 square feet, there are 362 available options in Midtown South totaling 1.4 million square feet. However, only 94 blocks are sublease space totaling a mere 368,199 square feet, which makes Midtown South a highly competitive market for this industry sector.
Companies looking for space in the 10,000- to 20,000-square-foot range will find only 96 opportunities totaling 1.3 million square feet. Within the 20,000- to 50,000-square-foot range, the number of blocks of space is halved with only 48, but totaling 1.4 million square feet. In fact, 45 percent of the available inventory is accounted for in the 32 blocks of available space greater than 50,000 square feet. Of course, these big blocks can be broken up for smaller tenants, but the ideal situation for these landlords is to land the big tenant.
No matter how you slice the data, Midtown South is a tight market.