Big Improvement in Big Availability
One of the many big stories in downtown Manhattan recently has been the declining office-availability rate.* And nowhere is that more true than in the World Trade Center district. The Class A availability rate for this pocket of just nine buildings (albeit very large ones) nose-dived to 17 percent last month from 22 percent in April, thanks in large part to a 700,000-square-foot lease signed by Time Inc. at 225 Liberty Street in Brookfield Place. Although not a real boost to the overall Manhattan market—the publisher is relocating from a larger footprint in Midtown—the lease does further solidify downtown Manhattan as a choice among all types of tenants, from FIRE to TAMI.
The availability rate for downtown was nearly twice the current figure as recently as December 2011, when it reached 30.3 percent as several major tenants shrank and/or relocated at Brookfield Place (still known as the World Financial Center at that time). Availability was slowly chiseled down through October of last year. But in November, 4 World Trade Center came online and added space to the district, causing the rate to tick upward. However, the figure has since eased again to the aforementioned 17 percent, the lowest since May 2011.
There will very soon be some pushing and pulling on that current availability rate, as 1 World Trade Center opens in the third quarter of this year. Currently there is about 1.3 million square feet of office space being marketed (because it is still under construction, NGKF doesn’t factor this space into the availability rate). If nothing further is pre-leased before the opening, then the availability rate will climb yet again, this time to 21.2 percent. On the other hand, several tenants with major requirements are closing in on lease transactions in the district, which could counterbalance this increase and then some. No doubt, we’ll be monitoring these developments very closely.
*The lower rate is due primarily to tenant relocations, which are occurring for a variety of reasons: changing demographics, improved transportation, expanded retail, new or remodeled modern space at a lower price point, etc. We’ll dive more deeply into these topics another time.