Since May, the vacancy rate in Midtown has increased 60 basis points to 9.4 percent, and overall leasing is down 14 percent compared to one year ago. Despite this slowdown, two of the nine Midtown submarkets had more demand so far year-over-year. The Grand Central and Sixth Avenue/Rock Center submarket’s overall leasing activity is up significantly from this time last year.
Grand Central stands out compared to one year ago, as total leasing activity is up 48.2 percent with almost 2.3 million square feet of leases completed. A big part of this increase is due to five leases signed greater than 100,000 square feet through May compared to one at this time last year. So far in 2016, Grand Central had the two biggest new leases signed in Midtown, NYU Langone’s 389,892-square-foot lease at 222 East 41st Street and Pricewaterhouse Coopers’ 240,605-square-foot lease at 90 Park Avenue. These two leases have also shifted the industry landscape though the first five months of the year.
The same five industries have led the pack for Grand Central leasing since 2014. The NYU lease has pushed health services as the leading sector in the start of 2016, which is up from the fifth spot compared to 2014 through 2015. So, let’s take a look at how the top five industries have traded spots this year based on the percentage of square footage leased.
1. Health Services: 22.1 percent in 2016 compared to 8.4 percent in 2014-2015
2. Financial Services: 21.1 percent in 2016 compared to 27.1 percent in 2014-2015
3. Professional Services: 16.2 percent in 2016 compared to 9.7 percent in 2014-2015
4. TAMI: 14.3 percent in 2016 compared to 16.7 percent in 2014-2015
5. Legal Services: 9.5 percent in 2016 compared to 12.7 percent in 2014-2015
Despite the early lead taken by health services within Grand Central this year, there are only seven health care tenants in the market looking for approximately 700,000 square feet, which should allow for some of the top five industries to catch up throughout the rest of the year.