Stat of the Week: 2.3 million square feet
The month of January brought a blizzard of space to the Manhattan office market, but thankfully, the city dodged an actual blizzard of snow that was predicted. An additional 2.3 million square feet of available space blanketed Manhattan with 11 buildings adding at least 45,000 square feet. Midtown South managed to avoid the avalanche of available space, but Midtown and Downtown were not so lucky. Manhattan has not seen this much space hit the market since February 2013.
Downtown was hit the hardest in the month of January as available space jumped to over 11 million square feet with almost 1.5 million square feet added to the market. Although availability increased 200 basis points to 12.4 percent, Downtown was prepared for this flurry of space. Even at 12.4 percent, availability is lower than the recent market high of 14.6 percent in June 2013. It may seem like Downtown is in need of a snowplow to dig out of this blizzard, but with Class A average asking rents still significantly discounted compared with Midtown and Midtown South, expect this space to be absorbed throughout the year.
Midtown added 937,684 square feet to the market in January with sublease space accounting for approximately 763,000 square feet. This was the most sublease space to hit the market in one month since July 2013. Most of the space added to Midtown fell into two submarkets: Sixth Avenue/Rock Center and the Fashion District. Similar to Downtown, these two submarkets are well positioned to weather the storm, as both had significant recoveries over the past two years. Midtown also signed two new leases each greater than 100,000 square feet to counterbalance all of the space added to the market, unlike Downtown, which had none.
Now that the halfway point of the first quarter has passed, let’s all hope that there are not six more weeks of winter in the real estate market.
Richard Perischetti is vice president of research, marketing and consulting at DTZ.