The softest portion of Midtown’s struggling office market is along Third Avenue between East 38th and East 60th streets, according to Crain’s. The avenue’s vacancy rate rose 2.5 percentage points to 17.8 percent in the first quarter of this year, well above Midtown’s overall 11.7 percent vacancy rate.
Much of the availability is in the form of large blocks of space. Nearly a half-million square feet are available at TIAA-CREF’s 685 Third Avenue, and about 275,000 more hit the market at 150 East 42nd Street, where Pfizer is seeking a subtenant. Four more buildings on the avenue have 100,000 square feet of contiguous available space within the next 12 months.
As a result, in addition to offering more concessions and tenant incentives, landlords are beginning to upgrade spaces at their buildings and pre-building them for tenants. The building stock is already younger than much of the rest of the city and the better spaces and falling rents could soon spark a turn-around.
“There’s a limited amount of large blocks of space in midtown, and I believe that in 12 to 24 months, we will see a tremendous amount of appreciation in rental values [along Third Avenue],” said Mitchell Konsker, a vice chairman at Jones Lang LaSalle. [Crain's]