As we ring in the New Year, let’s start with a toast to 2013. Last year started off slow, as the Manhattan available supply jumped to more than 50.4 million square feet at the end of the first quarter of 2013. But by the end of the year, the overall availability rate in Manhattan dropped 70 basis points from 2012 to 10.8 percent and dropped below 47 million square feet of available space for the first time since 2008. Moreover, 7.1 million square feet of positive absorption was posted in Manhattan. All of these positive trends occurred despite the addition of more than 4.6 million square feet of new construction
Midtown finally made its comeback with demand picking up throughout 2013. The submarkets on the west side of Midtown benefitted the most and pushed the availability rate down 100 basis points to 10.8 percent last year. Midtown’s positive absorption in 2011 and 2012 was a mere 454,000 square feet as demand for space was tepid, but in 2013, more than 3.7 million square feet of positive absorption was recorded—more than eight times the amount in the prior two years combined
Midtown South maintained the lowest availability rate of the three major markets, despite posting the smallest drop in its available supply. After being up and down throughout 2013, the availability rate settled at 8.8 percent, a 20 basis point drop from 2012. Some landlords combined available blocks of space for lease in 2013 in hopes to seize the opportunity of high tenant demand in this submarket over the past three years.
Despite Midtown having the largest decline in its available supply, Downtown Manhattan was the biggest surprise of 2013, as the availability rate dropped 40 basis points to 12.9 percent. After peaking at 14.6 percent in June 2013, the available supply steadily declined over the last six months. This held true even with the completion of 4 World Trade Center, which added more than 1 million square feet of new available space to the market. Companies continue to seek value opportunities downtown, as pricing for space remains heavily discounted to Midtown and Midtown South.
All in all, 2013 was a very good year for the Manhattan available supply, and here is to 2014 being another strong year.