There has certainly been a lot of opining about the tightening of the Midtown South submarket and how asking rents there have been climbing sharply. At the same time, there have been questions regarding how Midtown average asking rents have managed to hold their own despite the apparent push by tenants to relocate farther south. The reasons for this are twofold: first and foremost, even as the Midtown South submarket tightens, there are still plenty of tenants that prefer to remain, expand or move to Midtown. Second, much of the space recently added to Midtown consists of very high-end or trophy blocks in its most prominent corridors.
Among the six Midtown districts delineated by Newmark Grubb Knight Frank, two ring in with the top average asking rents in New York City. The current price leader is Park Avenue with an average of $89.81 per square foot; although this district has a relatively small number of buildings, many are prime boutique or top institutional properties with an average availability per building of 101,000 square feet.
In second place is Upper Fifth/Plaza with an average figure of $88.97 a foot. Despite having significantly more buildings than Park Avenue, they are generally smaller, with just 65,000 square feet on average available per property. Both submarkets remain popular, especially among smaller financial services firms.
Following those two districts in pricing are Avenue of the Americas/Rock Center, currently at $77.72 per square foot; Westside/Times Square at $69.42 a foot; Grand Central at $61.87 a foot; and Eastside at $58.59 a foot. There are, indeed, several Midtown South districts competing heavily at those price points.
While additional big blocks are expected to hit the Midtown submarket in the not-too-distant future, don’t expect any rise in vacancy/availability rates to lead to a drop in asking rates. These “primo” blocks will include 60 Columbus Circle, 1271 Avenue of the Americas, 75 Rockefeller Plaza and 1100 Avenue of the Americas, among others. So even if Midtown doesn’t have as tight a grip as it once did on high-end rents, it still will continue to lead the pack.