Midtown leasing velocity beat its five-year average for the first time in 18 months while the availability rate of office space improved slightly for only the second time since late 2007, according to a Manhattan monthly leasing report from commercial services firm CB Richard Ellis released today.
There was 1.58 million square feet leased in Midtown in July, up from 1 million in June, the report said, besting its 60-month average of 1.32 million square feet.
The increase in leasing was attributed in part to the continued decline in rents.
“The fact that pricing is getting to be more and more palatable just means that it takes the edge off… the amount of time that it might take for landlords and tenants to come to an agreement,” Pamela Murphy, senior vice president for research at CBRE’s tri-state region, said during a conference call covering the report this afternoon.
Big deals were also a large part of the story last month. There were four leases over 100,000 square feet in Midtown that together made up 57 percent of all lease deals over 100,000 square feet done this year, Murphy said.
Availability dropped in Midtown to 15.2 percent, from 15.4 percent in June, the report said, but still far above the rate of 9.1 percent a year earlier.
Overall, Manhattan saw its availability rate improve modestly to 14.1 percent in July from 14.2 percent in June, compared to 9.3 percent in July 2008. At the same time, average asking rents fell to $52.43 per square foot in July from $53.35 per square foot in June, while a year earlier prices were averaging $71.92 per square foot.
Manhattan saw positive absorption of 310,000 square feet in July, compared with a negative absorption of 460,000 square feet in June and negative absorption of 1.05 million in July 2008, the report showed.
Peter Turchin, executive vice president at CBRE, said during the conference call that despite the increase in leasing activity, tenants still have the upper hand.
“It is nice to see a little positive absorption, but we are not in a place yet which we really consider as equilibrium in terms of availability,” Turchin said.