Office leasing activity this year in the tight Midtown South market has already bested last year’s total by more than 2 million square feet, according to a new quarterly report released this morning by CBRE.
Transactions like Google’s 178,065-square-foot lease at 85 10th Avenue, Yelp’s 152,232-square-foot deal at 11 Madison Avenue and Squarespace’s 93,517-square-foot lease at 225 Varick Street have netted a year-to-date total of 5.16 million square feet for 2014 after last year’s leasing totaled only 3.06 million square feet in the market composed of six neighborhoods bounded by Chelsea and Madison Square on the north and Soho and Hudson Square on the south, the report says.
“This stat is starting to look very familiar every quarter,” said CBRE vice chairman Peter Turchin at a media briefing on the report at the firm’s Midtown East offices. “No matter what happens, we’re going to be ahead of last year. We were ahead of last year a few months ago. So no matter what we do, we’re going to have a record.”
Third-quarter leasing activity in Midtown South jumped 82 percent over the third quarter of 2013, shrinking availability rates by 50 basis points to 9.4 percent over the past 12 months, according to CBRE’s report. Vacancy rates in the area fell to 5.5 percent in the third quarter from 6.3 percent in the second quarter of 2014, the report says.
And while rents in the area decreased slightly to $66.58 per square foot over the past three months from $66.86 per square foot, according to CBRE, rents for the smaller set of Class A buildings in Midtown South have significantly outpaced those in the larger Midtown inventory, ABS Partners Real Estate found in its quarterly report. Class A Midtown South buildings are asking $90.01 per square foot, while Class A Midtown buildings run for $66.09 per square foot, according to ABS. The area’s overall average asking rents eclipse those in Midtown by nearly a dollar per square foot and vacancy rates in Midtown South stand at just below 6.2 percent, the ABS report says.
The area “continues to lead the nation as the tightest central business district,” according to Cushman & Wakefield‘s latest quarterly report, which found an 8.5 percent vacancy rate in Midtown South.