Rents on Manhattan’s once-invincible Sixth Avenue have flatlined and vacancies are on the rise, as technology firms are showing a preference for trendier neighborhoods and large blocks of sublease space have hit the market, the Wall Street Journal reported.
More than 780,000 square feet of office space is available for sublease along Sixth Avenue, according to CoStar data cited by the Journal. This allows tenants to find bargains, but is a worry for landlords who may have made recent big investments in the area.
“Large contingencies of sublease availability will, in general, drag down rents nearby,” Noam Shahar, research director at commercial real estate information company CompStak, told the Journal.
AXA Equitable’s recent efforts to sublease its space at 1290 Sixth Avenue are telling. The financial services firm recently inked a 148,421-square-foot sublease with Morgan Stanley — by far the year’s largest — as The Real Deal reported.
But rents paid were in the $40s per square foot, according to CompStak — far below the $88 per square foot AXA pays landlord Vornado Realty Trust in their direct lease.
Meanwhile, tech-friendly Midtown South has seen average rents jump 9 percent in the first quarter, passing the $60 threshold for the first time, according to data provided to the Journal by CBRE. [WSJ] – Hiten Samtani