Class A office space in Manhattan now accounts for 62 percent of the total available supply — a significantly higher percentage than in past recovery cycles, according to Richard Persichetti, Cassidy Turley’s vice president of research, marketing and consulting. Although it’s true there is 101 million square feet less Class B office space than Class A, the smaller volume doesn’t wholly account for the smaller level of supply, Persichetti noted in a New York Observer column.
For example, in 2006, Class B office space accounted for 46 percent of the supply, compared to 32 percent today.
These days, value-conscious technology firms are gravitating towards Class B space in Midtown South. Indeed, Class B space in Midtown South is the market driving the recovery, with asking rents up 46 percent since their 2010 low, Persichetti wrote.
Plus, the higher rents came even though Midtown South saw a year-over-year increase in availability, as previously reported.
On the Class A side, rents only increased 23 percent during this same time period. [NYO] –Zachary Kussin