Stat of the Week: 12.3 Million Square Feet
As we all sit around dreaming of the large gifts on our holiday wish-list, what better way to wrap up the year than by looking at the big leases for Manhattan – the large gifts of the real estate world. There have been 49 leases greater than 100,000 square feet signed throughout Manhattan so far this year. Although this is slightly off the pace of the 56 large leases signed in 2013, I expect a few more big deals to be signed before the end of the year, having 2014 approach those stellar 2013 numbers.
This year’s 49 leases total over 12.3 million square feet, with an average deal size over 252,000 square feet. Despite the fact that in 2014 there were 12 leases signed over 350,000 square feet —four more than all of 2013—the average deal size is down from the 2013 average of 263,000 square feet. Of the 49 leases signed, two-thirds of them were completed by Manhattan’s “big three” industries; the financial services, TAMI and professional services sectors took down 11 big blocks of space each.
In 2014, there has been a shift in large tenants’ leasing habits, as only 43 percent of the leases were renewals, compared to 57 percent in 2013. The increase in new leases completed this year has moved the needle on the available supply, as 28 new leases signed over 100,000 square feet helped drop available space by more than 5.7 million square feet.
Manhattan overall average asking rents are up a healthy 8.2 percent year-over-year to $69.94 per square foot, but the increase for starting rents on large leases is even more significant. With an average starting rent of $68.31 per square foot in 2014, there is a 19.6 percent increase compared to 2013. Downtown starting rents were flat at $48.00 per square foot, while Midtown South and Midtown skyrocketed. The average starting rent on the nine large leases completed in Midtown South was $71.73 per square foot, a stunning 50.2 percent increase from last year. Midtown average starting rents on the 28 big leases this year reached $78.48 per square foot, up 20.8 percent in 2014.
Here’s to a happy holiday season and hopes that more big leases (and presents) soon will be here.