Stat of the Week: 2.3 Million Square Feet
Through the first four months of the year, the Manhattan office market has had its share of ups and downs. The overall borough vacancy rate is up 60 basis points to 9.1 percent since the end of 2015, fueled by vacancy increases in Midtown and Downtown, while the Midtown South vacancy rate dipped. Despite vacancies being sporadic this year, Manhattan direct overall average asking rents are up 1.7 percent to $74.80 per square foot. The increase is due to a significant increase in Midtown direct asking rents, up 3 percent to start the year to $82.02 per square foot, while Midtown South and Downtown direct asking rents both had minimal declines.
Leasing activity results after the first four months are just as erratic, even with April being the strongest leasing month since November 2015 with over 2.3 million square feet of new leases. This brings the 2016 leasing velocity in Manhattan to 8.9 million square feet, but even with over 2 million square feet leased each month this year, activity is still down 10.9 percent since one year ago. A big reason for the decline in activity is the lack of large new leases greater than 100,000 square feet through April with only nine completed in 2016 compared with 21 in 2015.
Midtown is the only market that had a decline in leasing activity year-over-year, and with 5.7 million square feet of new leases through April, activity is down 21 percent. Despite this drop-off in activity, there have been some bright spots of activity in the Grand Central and Sixth Avenue/Rock Center submarkets. In April, Grand Central accounted for 47.1 percent of Midtown’s new leasing activity, and with over 1.4 million square feet leased this year, activity is up 37.7 percent from one year ago. The Sixth Avenue/Rock Center submarket had a great start to the year as well, with just over 1.1 million square feet of new leases completed through April, 94.3 percent higher than one year ago, and it has already surpassed its mid-year 2015 totals.
Midtown South had the strongest year-over-year leasing activity in April, up 24.2 percent with more than 1.9 million square feet of new leases. Downtown also had an increase compared with one year ago, up 3.4 percent with 1.2 million square feet leased through April.