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Manhattan office market’s post-crash recovery slows in April
Seven new blocks of space in Midtown South drive vacancy rate increase
The Manhattan office market’s ongoing recovery slowed in April, as the overall ability rate rose, with roomy Midtown South offerings hitting the market, according to the April 2014 Office Market Report from commercial brokerage Cassidy Turley.
Manhattan Class A office rents hit an average ask of $74 per square foot in April, a 5.3 percent year-over-year jump from $70.24. Availability dropped to 10.6 percent, from 11.7 percent the same time last year.
A total of 46.18 million square feet were available in the borough overall, and Manhattan reported an absorption rate of negative 756,598 square feet.
Vacancy rates in Midtown South jumped 140 basis points to 8.9 percent in April – a gain buoyed by the addition of seven new blocks of space totaling 95,000 square feet or more to the market. The space included two connected spaces the Port Authority of New York and New Jersey will soon vacate at 225 And 233 Park Avenue South. Class A asking rents, meanwhile, were up 5.4 percent to an average of $73.11 per square foot last month, from $69.34 in the same period last year.
“Midtown South had a similar trend last year,” said Richard Persichetti, vice president of research, marketing and consulting for Cassidy Turley. In June, availability dropped down to 8.2 percent, then spiked 100 basis points. “It’s sort of like a roller coaster, but nothing damaging. Rents are still going up.”
Midtown held steady, with availability dropping only 10 basis points in April to 10.7 percent – the lowest reported availability in more than six years. Absorption was positive for the third consecutive month at 372,574 square feet, and asking rents jumped 7 percent to $82.48 from $77.02 year-over-year.
“Midtown continues to do well, we’re still seeing positive momentum,” Persichetti said. “We’ve already recovered all of the negative absorption experienced in January, when 4 Times Square came on market. Not that specific space, but there has been enough positive absorption in the market to negate increase of available supply.”
Downtown also hummed along with a 10-point availability drop to 12 percent last month, and an absorption rate of 118,064 square feet. Asking rents hit $55.05 per square foot, up 3 percent from $53.42 in April 2013.