Stat of the Week: Negative 71.6 Percent
The TAMI (technology, advertising, media and information services) sector has taken a backseat to the financial sector this year in both jobs added and space leased. TAMI jobs are down by 8,100 since the end of 2016, while the financial sector added 8,200 jobs. With fewer jobs in the industry, TAMI demand slowed by 8.1 percent year-over-year through August, as only 2.8 million square feet was leased.
TAMI leasing in Midtown and Downtown is up this year, while the sector’s activity in Midtown South is down. Midtown TAMI leasing totaled 1.4 million square feet of new leases signed exceeding 10,000 square feet, an 8.6 percent increase. Downtown TAMI leasing jumped 78.9 percent from one year ago with 1.1 million square feet leased. Downtown continues to steal market share from Midtown South, as TAMI activity steadily increased each of the past two years, and asking rents have remained 13.4 percent lower on average.
The biggest surprise for this sector is that TAMI leasing in Midtown South is down 71.6 percent compared with last year with only 328,589 square feet leased—and no, those are not typos. One of the reasons could be the limited supply in Midtown South, and vacancy is up 50 basis points to 7.2 percent since the end of 2016, supply and viable options are still limited. This has caused the overflow for TAMI into Lower Manhattan, which offers tenants more options and value.
Although TAMI has lost market share to the financial sector so far this year, TAMI leasing is actually up 8.8 percent compared with the same time period in 2015. The bigger issue is employment in this sector, which could get a boost due to strong second quarter venture capital funding in the New York City metro area. There was $2.8 billion funded last quarter, which was the largest one-quarter total since the third quarter of 2000 and 58.9 percent above the quarterly average over the past year.