New lease deals dominate Manhattan office market in 2014

It may not be out with the old, but it’s certainly in with the new. Throughout Manhattan, new leases comprised a larger chunk of all office deals in 2014, rising to 63 percent from 55 percent year-over-year based on square footage leased. That’s according to CompStak’s latest rent report, provided exclusively to The Real Deal.

The high-profile new leases included Sony’s 525,000-square-foot deal at the Sapir Organization and CIM Group’s 11 Madison Avenue, and law firm White & Case’s deal for 440,000 square feet at the Rockefeller Group’s McGraw-Hill Building.

Companies in the technology, advertising, media and information sectors, collectively known as TAMI tenants, continued to have a big impact. Their presence was felt particularly in Downtown, where they occupied a record 43 percent of all the area’s office space in 2014, according to CompStak.

TAMI tenants continued to head Downtown to find relatively affordable Class A office space, including Time Inc., which took 700,000 square feet at Brookfield Place. Downtown Class A effective rents averaged $41 per square foot in 2014, according to CompStak. Meanwhile, Class B effective rents in the submarket were a little more than $35 per square foot.

The effective rent for Class B buildings in Midtown climbed to $49 per square foot from $44.5 per square foot year-over-year. Midtown South’s Class B effective rents also grew – to $52 per square foot from $47.8 per square foot in 2013.

“The high Midtown South Class B rents drove tenants to other markets with a large class B inventory such as Penn Station and Times Square,” the report stated. “This is a 2014 trend, not just a fourth-quarter trend.”