The Real Deal New York

Asking rent spread in top Midtown buildings falls by 74 percent: CBRE

July 08, 2010 10:32AM
By Adam Pincus

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From left, 11 Times Square, 320 Park Avenue, 1 Bryant Park and CBRE’s Peter Turchin

The
downturn has sharply reduced the premium rent asked by landlords of
about two dozen of Midtown’s modern Class A buildings, executives from
CB Richard Ellis said.

The asking rent premium for the top
office buildings, representing about 40 million square feet in Midtown,
has fallen by 74 percent, company figures released today reveal. (note: correction appended)

The
top buildings as chosen by CBRE now charge $11 per square foot more
than the rest of the Midtown properties, a 17 percent premium, compared
with a spread of $43 per foot, or 60 percent, near the peak of the
market in 2008, CBRE statistics show.

That decrease in the
spread, making the top buildings relatively more affordable, has driven
down the availability rate in those buildings such as 11 Times Square,
320 Park Avenue and 1 Bryant Park.

The availability rate last
month was about 9.9 percent below the average of the remaining
Manhattan properties, which was about 12.2 percent last month, Peter
Turchin, executive vice president of CBRE said. He was speaking this
morning at a quarterly briefing on the Manhattan office leasing market,
held in the company’s Midtown headquarters.

But landlords have started to take advantage of the tighter market, Turchin said.

The spread “has started to slightly widen again”, he said.

But
the greater demand would not translate into new construction in the
near term in part because of the broader availability rate in Manhattan
of 14 percent, Turchin said.

For Manhattan overall the
availability rate remained about flat, at 14 percent, a slight uptick
from May, when it was 13.9 percent. The average asking rent for
Manhattan rose by 3 cents in June to $47.61 per square foot, CBRE
figures show.

Cushman & Wakefield, in its quarterly market briefing yesterday,
said Manhattan office leasing volume doubled in the first six months of
2010 to 12.6 million square feet, compared with the same period last
year.

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