Stat of the Week: 190 Basis Points
As 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.
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.