The 45% Spread: A Decade Analysis, Part II
Last week we looked at the aging of Manhattan office properties constructed pre- and post-1970, and uncovered that the pre-1970 buildings have a lower availability rate of 8.9 percent. This week, we will further break down the market and determine which of the three major markets and 17 submarkets are outperforming or underperforming the rest of the market based on the same pre- and post-1970 construction metrics.
Examining the three major markets—Midtown, Midtown South and Downtown—the Downtown market has the lowest pre-1970 availability rate, while Midtown South has the lowest post-1970 rate. Downtown edged out Midtown South in the pre-1970 category with a 7.8 percent availability rate compared to 7.9 percent. Midtown lags the rest of Manhattan with a pre-1970 availability rate of 9.3 percent. From a post-1970 construction standpoint, Midtown South has the lowest availability at 0.5 percent; this statistic is misleading, however, as only 6.6 million square feet has been built since 1970 in this market. Midtown’s post-1970 availability rate sits at 10.9 percent, while Downtown has the highest availability at 14.1 percent.
From an asking rent perspective, Downtown has the largest difference between pre- and post-1970 buildings. At $62.56 per square foot, post-1970 buildings are 45 percent more expensive than the pre-1970 average of $43.15 per square foot. In Midtown, the price differential is 27 percent, with post-1970 buildings averaging an asking rent of $87.76 per square foot and pre-1970 buildings averaging $69.34. Midtown South posts the narrowest gap between asking rents at only 17 percent, averaging $74.41 per square foot on post-1970 and $63.74 on pre-1970 buildings.
Breaking the data down further to the submarket level uncovers some interesting facts. Flatiron/Union Square is the only submarket to not have any buildings greater than 100,000 square feet built after 1970. Hudson Square/TriBeCa has the lowest post-1970 availability rate at 0.1 percent, while SoHo/NoHo/Village posts the lowest pre-1970 availability at 4.6 percent. The highest submarket availability rates are in Fifth/Madison for the post-1970 buildings at 16.2 percent and Times Square for the pre-1970 buildings at 14.7 percent.