While asking rents are up along Sixth Avenue, demand may not be rising as fast, according to a Savills Studley report.
The amount of space available for sublet dropped from 1.8 million square feet in the third quarter of 2011 to a little more than one million square feet (19 percent of the the total available space) in the second quarter of 2014.
The decrease in sublet space, along with more high-quality space available for rent, has pushed up prices. But the drop of space doesn’t account for space that will be freed up over the coming months and years. Some large tenants — such as Time Inc. — will be leaving the area.
Indeed, the amount of available space on the Sixth Avenue corridor has only decreased by 2.1 percent since the third quarter of 2009. In total, according to the report, 61 spaces have been on the submarket for a year or more, but only seven saw a decline in asking rents.
“Before they lower asking rents they will try to lease the space with concessions,” Heidi Learner, chief economist at Savills, told the Wall Street Journal, referring to allowances to improve or build tenants’ spaces or free rents for a certain period. “Concessions rarely make headlines.” [WSJ, 1st] — Claire Moses