Midtown South Strikes Back
Last year was kind of a slow one for Midtown South from an availability standpoint. The available supply started 2013 at 7,669,177 square feet, and by year-end it had only dropped down to 7,546,690 square feet. But this year, Midtown South strikes back and comes out with a vengeance not seen since the Empire decimated the rebels on Hoth. Sorry, the recent cold weather has me feeling like we live on an ice planet, so pardon the Star Wars reference.
In January, Midtown South available supply dropped down to 6,737,259 square feet, a 110-basis-point decline to 7.7 percent availability, the lowest it has been since early 2007. All five submarkets had decreases in available supply with the Soho/Noho/Village area leading the attack; its availability shot down 230 basis points to 5.7 percent. A big portion of this decline can be attributed to the IBM Watson Group lease at 51 Astor Place for 118,435 square feet.
Leasing activity in Midtown South started the year strong as well, with more than 2.1 million square feet leased in January thanks to the 1.2-million-square-foot renewal by Credit Suisse at 11 Madison Avenue. Also at 11 Madison Avenue, Sony inked a 520,000-square-foot lease for the 18th through 29th floors. And the leasing attack throughout Midtown South did not stop there, as three other major transactions were signed in the 40,000- to 60,000-square-foot range with Spotify, Mashable and MasterCard all leasing space in the submarket last month.
With the flurry (pun intended) of activity, asking rents continue to rise in Midtown South, as the overall average asking rents increased to $62.08 per square foot, an 11 percent increase from one year ago. Class B asking rents continue to be the driving force behind these increases, jumping to $60.60 per square foot in January. Even the frigid temperatures in New York City this winter can’t cool off Midtown South.
Richard Persichetti is the vice president of research, marketing and consulting at Cassidy Turley, with 14 years of NYC research experience.