The Real Deal New York

Manhattan office leasing in first half of 2014 strongest since 2002

Big deals like Brookfield Place inking Bank of New York Mellon lift results

July 01, 2014
By Adam Pincus

Click to enlarge

Click to enlarge

Office leasing volume for the first six months of 2014 was the strongest in a half-year period since 2002, led by large leases like the Bank of New York Mellon deal announced late last month in Lower Manhattan, information from commercial firm Colliers International showed.

“The market is getting stronger, especially Downtown. All of the stars are sort of aligning,” said Bradley Gerla, executive vice president with brokerage firm CBRE.

The Bank of New York Mellon’s deal, for example, is a 20-year lease at Brookfield Place’s 225 Liberty Street, for about 350,000 square feet.

Overall, tenants in Manhattan leased 19.7 million square feet in the first six months of 2014, including 7.9 million square feet in the second quarter, the Colliers figures showed. That is the highest half-year run since 2002, when there was 23 million square feet leased in one six-month period.

Over the last year, average asking rents in Manhattan jumped by 13.7 percent, to $64.46 per square foot in the second quarter, from $56.69 per foot in the same period in 2013, the preliminary Colliers data showed. The availability rate in the April-to-June period dropped by 1.5 points to 11 percent, from 12.5 percent in the second quarter of 2013.

“The Manhattan office leasing market continues to see gains,” said Joseph Harbert, president of Colliers Eastern Region. “Downtown posted the biggest drop in available space.”

Midtown

A commercial building on the West Side hit the market last month, testing the interest for back office users, tech firms and others far from Time Square’s bustle.

Potential users are taking a look at the six-story, 75,000-square-foot loft-style commercial building at 645 11th Avenue, at the corner of 47th Street.

“It could be tech or secondary office space for somebody who does not want to pay $80 [per foot] in Midtown,” said Jay Cummings, president of J.R. Cummings Co. Real Estate. He is marketing the entire building with an asking rent of $50 for a triple net lease, which makes the tenant responsible for all costs like taxes and utilities.

The average asking rent in Midtown jumped significantly last quarter to $74.29 per foot, up by $8.21 per square foot over the asking rent in the second quarter of 2013, when it was $66.08 per square foot.

At the same time, the availability rate in Midtown declined by 0.8 points to 11.4 percent in the second quarter, down from 12.2 percent in the same three-month period in 2013, the Colliers figures showed.

Cummings has several users of a different sort looking, including a school and an entertainment company.

He noted there are office users in the neighborhood, including the advertising agency Ogilvy & Mather, whose New York office is a block away at 636 11th Avenue.

Midtown South

A nonprofit closely associated with the large science and mathematics charity the Simons Foundation is taking the 16th and 17th floors of 915 Broadway.

Math for America signed an 11-year lease for 21,536 square feet late last month in the 225,603-square-foot office building at 21st Street, just south of Union Square.

The asking rent for the space was $72 per square foot, far higher than the average in Midtown South last quarter.

Colliers found the average asking rent in Midtown South was $56.47 per square foot, up by $4.86 per foot from the same period a year ago, when it was $51.60 per square foot. The availability rate during the same period fell to 8.9 percent, down 0.8 points from 9.7 percent in the second quarter of 2013.

Math for America wanted to be near Simons, located at 160 Fifth Avenue, a source familiar with the deal said.

“We are very pleased to have such a well-established and secure tenant at 915,” said James Caseley, an executive managing director of leasing & management at ABS Partners Real Estate. He, along with Carol Sacks and Alex Kaskel, represented the landlord of 915 Broadway, a partnership assembled by Gregg Schenker, president of ABS. A leasing team from Cassidy Turley including Peter Hennessy, president of the New York Tri-State region, and Tracy Johnson, represented Math for America. The firm did not respond to a request for comment.

Downtown

The Port Authority of New York and New Jersey made headlines last month as a landlord after it agreed to release $159 million in insurance proceeds to developer Larry Silverstein, facilitating his financing for 3 World Trade Center.

But as a tenant, the agency had an impact on the Lower Manhattan market as well, though in a more limited way. A large block of space it occupies, some 145,000 square feet at 115 Broadway, hit the market last month. The agency plans to vacate the space completely by 2016, in its long-planned relocation to 4 World Trade Center.

A leasing team including CBRE’s Gerla is marketing the space, with an asking rent of $47 per foot in the 451,616-square-foot building, CoStar Group figures showed. That price is just shy of Downtown’s average last quarter of $48.96 per foot, as reported by Colliers, which represents a jump of $2.76 per square foot over the second quarter of 2013, when it was $46.20 per foot. During that same time, the availability rate declined by 3.7 points, far more than the other two Manhattan markets. Last quarter it stood at 13.3 percent, down from 17 percent a year ago.

The seven floors, each just over 20,000 square feet, at Capital Properties’ 115 Broadway that CBRE just brought to market will become available at different times.

“We [received] a lot of calls from large block tenants who have leases that are not up for a bit,” Gerla said. Since floors 5 through 7 become available at the end of 2015 together, CBRE is targeting a tenant in the 60,000-square-foot range for that.

Floors 8 and 9 are available earlier, so CBRE is targeting a 40,000-square-foot user for that block.

Gerla said they were getting interest from advertising tenants, now that Conde Nast’s move to 1 World Trade Center is imminent. The magazine empire’s shift from Midtown is reverberating within the Downtown market.

“A lot of the tenants feed on the publishing. We are seeing a lot of advertising tenants,” he said.

comment form

You must be logged in to post a comment.

MENU