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Midtown South lost its grip on tech leasing in 2017: Colliers
Downtown grabbed market share with its largest TAMI lease ever
Midtown South has traditionally been — and still remains — the epicenter of tech in the city. But the trendy market saw its grip on technorati loosen in 2017, which was the first time in seven years that the area didn’t capture at least half of the office leasing activity from Manhattan’s tech industry.
In a year when tech leasing climbed more than 9 percent to 3.63 million square feet, Midtown South saw only 46 percent of that leasing volume, according to a report from Colliers International. That was down from 65 percent in 2016 and the first time the market fell below the 50-percent mark since 2010.
“We are seeing pockets of increased tech leasing activity in areas outside of Midtown South, such as lower Sixth Avenue near Bryant Park and Downtown,” said Franklin Wallach, managing director of Colliers’ research group.
The largest beneficiary of that branching out was Downtown, which saw its share of tech leasing volume reach 25 percent in 2017, up from 10 percent the year before.
In fact, Spotifty’s 378,000-square-foot lease at Silverstein Properties’ 4 World Trade Center (later expanded by another 103,000 square feet) was the largest tech deal ever for Lower Manhattan, according to Colliers.
In Midtown — where Snapchat renewed 153,000 square feet at the old New York Times building at 229 West 43rd Street and open-source database startup MongoDB inked a 106,000-square-foot deal at 1633 Broadway — leasing accounted for 29 percent of tech deals, up slightly from 25 percent in 2016.
And it’s not just that tech companies are heading north and south: Other industries that weren’t traditionally thought of as Midtown South-type tenants increased their footprints in the area last year.
Finance, insurance and real estate tenants nearly doubled their leasing activity in Midtown South in 2017 to 34 percent, according to CBRE.
To be sure, tech remains a small slice of Manhattan’s total leasing figures at 9.8 percent of all deals, and one big deal can shift the winds in either direction.
“As with all leasing data charted by industry sector, one or two large deals can really move the needle in terms of demand, in any given year,” said Craig Caggiano, executive director for Colliers’ tri-state region.
Colliers also noted that since 2003, there have only been six tech deals of 250,000 square feet of more, two of which closed last year: Spotify’s deal Downtown and Amazon’s 360,000-square-foot lease at 5 Manhattan West.