Real Estate Super Bowl: Midtown Class A vs. Class B Buildings
Richard Persichetti Jan. 28, 2014, 7 a.m.
With the first ever New York City-area Super Bowl to kick off this Sunday, what better way to start Super Bowl week than with the first annual Stat of the Week Bowl? This year’s competitors are Midtown Class A buildings versus Midtown Class B buildings, and both performed well enough this year to make it to the big game. Just like the Denver Broncos are 2.5-point favorites over the Seattle Seahawks, I put Midtown Class A slightly ahead of Midtown Class B at the start of this comparison. Let’s take a look at how these two Midtown classes stacked up in 2013.
Midtown Class B came out strong, starting the year by running up rents, as average asking rents increased $5.34 per square foot in the first half of 2013. Class B asking rents then followed up this great performance by leaping another $5.47 per square foot in the back half of the year, which put the average asking rent up 22.3 percent on the year to $59.33 per square foot. Midtown Class A asking rents did not stand a chance against these numbers. Class A asking rents only increased $5.08 per square foot for all four quarters for a mere 6.8 percent jump.
Midtown Class A available supply started 2013 with 21.5 million square feet on the market. However, just four quarters later, it dropped by 9.2 percent to 19.6 million square feet. The rate of decline outpaced Class B available space, as its supply only came down 3.7 percent from 7.9 million to 7.6 million square feet. But was the success of the Class A supply enough to beat the increase of Class B asking rents?
Assigning points for the average asking rent increase and the rate of decline for available supply surprisingly has the underdog, Midtown Class B, winning! Midtown Class A comes in with a respectable 16 points, but it can’t beat Midtown Class B’s 26 points. Maybe the Seahawks will follow suit with an upset.