The downtown office market is continuing to draw tenants from Midtown and Midtown South, reversing historic trends, according to new data from Cushman & Wakefield.
The leasing velocity in lower Manhattan in January was 740,668 square feet. [Update: Cushman & Wakefield originally erroneously said the leasing velocity was 592,959 square feet.]
“I expect some major leasing announcements downtown early this year, putting us well on our way to reaching 5.5. [million] to 6 million square feet or even surpassing this level,” said Cushman & Wakefield’s Tara Stacom in a prepared statement. “This pace of leasing activity will likely become the new norm for lower Manhattan.”
Lower Manhattan has become appleaing to tenants of all sizes due to its varying types of office buildings and cheaper rents.
Average asking rents downtown are $48.26 per square foot versus $69.52 per foot in Midtown and $62.61 a foot in Midtown South, Cushman data indicate.
Also, downtown now has a solid transportation infrastructure and proximity to new hotels, restaurants, retail and residents.
This year’s figures are in keeping with the recent past.
As Commercial Observer previously reported, commercial leasing in lower Manhattan was strong in the fourth quarter last year, marking the best-performing quarter since 2006, according to a report from Alliance for Downtown New York.
Cushman expects vacancy rates to drop by about 20 percent over the next few years to 12 percent in 2017, due to an increasing demand for Class A office space, and rents to rise 20 percent to $64.73 per square foot.