70 Basis Points: The Sequel
Most sequels fail to deliver. The biggest disappointment for me was Caddyshack II, a sequel that is simply unwatchable and highly forgettable. However, this Stat of the Week exceeds its predecessor (if I do say so myself). I first wrote a 70-basis-point stat of the week to start off 2014. The original focused on how Manhattan availability dropped 70 basis points in all of 2013, but this sequel outshines the original. By midyear 2014, the availability rate declined the same amount as in all of 2013, down to 10.1 percent—the lowest in 23 quarters.
Absorption totaled just shy of 3 million square feet, due to an increase in leasing activity in Midtown and Lower Manhattan. In fact, Class A space has been in high demand this year, as Class A absorption, at 3.1 million square feet, surpassed overall absorption. With demand outpacing supply, it has also decreased the amount of existing large available blocks of space, which fell from 82 in June 2013 to 76 in June 2014. The increase in demand has led to continued asking rental increases, as both Class A and Class B averages jumped 3.8 percent since the start of the year.
Downtown was the largest contributor to the 70-basis-point decline, as its availability rate dropped 200 basis points, to 10.9 percent. Big leases signed by Time Inc. and Bank of New York Mellon drove this large decline in the first half of 2014. Midtown had a 40-basis-point decline in the available supply, to 10.4 percent. At 4.5 million square feet, Midtown available sublease space reached its lowest level since first quarter 2008. Midtown South also had a 40-basis-point-decline in availability, to 8.4 percent, despite over 1 million square feet hitting the market in April.
Based on these statistics, I would say this sequel is a hole in one.