Midtown hit hard in weak October office leasing report

By Adam Pincus | November 13, 2008 05:36PM

Midtown saw the greatest amount of office space returned to that submarket since January 2003, fueling an increase in vacancies and a decrease in asking rents throughout Manhattan, according to a report released today by CB Richard Ellis.

Midtown experienced a net absorption of negative 1.85 million square feet in October, driving up the overall Manhattan vacancy rate to 6.6 percent from 6.1 percent in September, while average asking rents fell more modestly to $69.10 from $70.72.

There were at least four blocks of office space greater than 100,000 square feet returned to Midtown’s market in October, including space at 200 Park Avenue, 605 Third Avenue, 125 Park Avenue and 340 Madison Avenue, the report said.

In Midtown, average asking rents fell $3.03 from a month earlier to $81.71 while vacancies rose .9 points to 6.3 percent, the report said. Prices fell in response to asking rent reductions for old space, the report authors said.

“In September, we began to see landlords lower asking rents for a handful of blocks already on the [Midtown] market. That trend gained momentum in October, with landlords reducing asking rents for 30 blocks totaling 600,000 square feet by an average of 14 percent,” they said.

The Midtown South and Downtown submarkets fared better.

In Midtown South, average asking rents were nearly flat month-over-month, falling $.09 to $52.77 while vacancies improved .6 points to 6.5 percent. Downtown, average asking rents fell $.23 to $50.12 from the month before, while vacancies dropped .1 point to 7.3 percent, CBRE reported.