Average asking rents in Midtown South have nearly closed the gap with those in Midtown, according to a new report from CBRE Group.
Rent growth in Midtown South averaged 13 percent per year between 2010 and 2013, in line with past spikes in 2000 and 2008, Crain’s reported. CBRE believes that growth is more sustainable this time around as established tech firms such as Twitter and IBM Watson lease space in the neighborhood.
While more established IT firms move into the neighborhood, CBRE reports that start-up tech firms are moving out. One issue: landlords can be wary of renting to the unproven businesses, who often require short-term leases and other special accommodations, as The Real Deal previously reported.
As rents rise, budget-conscious nonprofits are also exiting Midtown South, leaving 4.1 million square feet of vacant space in their wake, Crain’s reported. Retail and financial firms have also scaled back their presence, freeing up 2.53 million feet and 2.99 million feet, respectively.
The wave of commercial leasing parallels a residential boom. Midtown South’s population increased 9.2 percent between 2000 and 2010, well above the 2.1 percent growth rate for the city, reported Crain’s [Crain’s] – Tom DiChristopher