Stat of the Week: 190 Basis Points

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LEEDBuildingsAs the 46th year of celebrating April as Earth month comes to a close, let’s see how well green office buildings stack up compared with the rest of the market. There are over 143 LEED-certified office buildings totaling 114.4 million square feet throughout Manhattan, which provide lower energy costs and better indoor working environments for employees. LEED-certified buildings are more attractive to tenants that are committed to a positive social and working atmosphere for their staff, and these buildings have been in high demand.

The market for LEED-certified is tighter than the overall Manhattan office market with a vacancy rate 190 basis points lower at 7.1 percent. Class B buildings with LEED certification have the lowest vacancy rate in Manhattan at 5.8 percent. The LEED-certified direct average asking rent is $85.99 per square foot, which is a 15.2 percent premium over the market average of $74.64. Direct asking rental increases in LEED-certified buildings have outpaced the rest of the market over the past year, increasing 14 percent compared to only 6.5 percent.

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This comparison holds true for the three major markets as well. At 8 percent, vacancy in Midtown LEED-certified buildings is 130 basis points lower than overall Midtown’s 9.3 percent. Midtown South LEED-certified buildings have a market-low 3.4 percent vacancy rate, 290 basis points lower than the Midtown South vacancy rate of 6.3 percent. Downtown has the biggest spread between vacancies, as the LEED-certified vacancy rate is 4.8 percent compared to the overall market rate of 10.2 percent, a 540-basis-point difference.

Midtown LEED-certified building direct average asking rents have the highest premium over the market average. At $85.99 per square foot, Midtown LEED-certified direct asking rents are 9.7 percent higher than the overall Midtown average. Midtown LEED-certified direct asking rents had the highest year-over-year increase, up 14.7 percent. Midtown South LEED-certified direct asking rents are 7.4 percent higher than the market average at $74.79 per square foot, while Downtown LEED-certified direct asking rents are only 2.8 percent above the market average at $62.01 per square foot.