Midtown South Office Asking Rents Eclipse Midtown’s for First Time: C&W
While Midtown South has already established itself as Manhattan’s most in-demand, supply-constrained office market, the third quarter of 2018 saw the submarket surpass its northerly neighbor, Midtown, for the first time on record when it comes to average asking rents, according to a report from Cushman & Wakefield.
Average asking rents in Midtown South, which C&W described as the “tech center” of Manhattan, rose to an all-time high of $76.42 per square foot in the third quarter—just above the $76.12 per square foot asking rents seen in Midtown, according to the brokerage.
The rents being commanded in Midtown South are not only impressive by New York standards but national benchmarks, with Midtown South now eclipsing Midtown as the priciest office market in the nation in terms of asking rents.
“For the first time since 2001, a market other than Midtown Manhattan had the highest asking rent in the nation,” C&W said. After the Midtown South and Midtown, San Francisco came in third with average asking rents of $74.72 per square foot, followed by Downtown Manhattan at $63.72 per square foot (a record for the submarket) and the Silicon Valley stronghold of San Mateo, Calif., at $57.98 per square foot. Nationally, average office asking rents exceeded $50 per square foot in only one other market nationally: Washington, D.C., which commanded $54.41 per square foot.
Manhattan at large saw leasing activity soar to its highest level in four-and-a-half years, with 9.6 million square feet of new office leases transacted in the third quarter, per C&W data. At this pace—with 25.7 million square feet of office leases signed through the first nine months of 2018—Manhattan is currently on track to reach its second-highest new leasing year on record after 2014, the brokerage said.
“The robust activity in Q3 marked the second consecutive quarter that leasing surpassed 9 million square feet, and strongest two-quarter period on record,” Louis D’Avanzo, a vice chairman and managing principal in C&W’s Midtown office, said in a statement.
D’Avanzo noted that Midtown South’s eclipsing of Midtown in terms of average asking rents was driven by new construction—such as Vornado Realty Trust‘s recently completed office building at 512 West 22nd Street, located in Chelsea near the High Line—coming to market “with triple-digit asking rents.” Average asking rents in Manhattan overall “remained stable” at $72.65 per square foot, according to C&W.