The volume of new relocation deals for large blocks of office space in Manhattan fell by 71 percent in the fourth quarter of 2009 from the third quarter, as tenants chose to remain in their current locations instead of move, data from commercial real estate firm Studley, prepared for The Real Deal, show.
There was just 603,175 square feet of new space leased in large deals in the fourth quarter in Manhattan, down from 2 million in the third quarter, the firm’s figures indicate.
In fact, new leasing for large deals, of 50,000 square feet or more, was only slightly behind the 702,086 square feet leased in the second quarter, a period considered historically very weak, the data reveal.
Steven Coutts, senior vice president of research at Studley, said tenants were opting to stay to save money.
“Although there are some great deals out there to move, most don’t want to take the expense to take advantage of it,” Coutts said. “The majority of deals are renewals and downsizing.”
The firm reported that the total volume of leasing — including new deals, renewals and expansions — for the large deals rose by 8 percent to 3.2 million square feet in the fourth quarter from 3 million square feet up to 3.2 million square feet in the third quarter, the firm reported.
For all sizes of Manhattan leases, deal volume surged to 8 million square feet, the highest level since the third quarter of 2006. Coutts said that was not evidence of a return of strength to the leasing market, but instead a reflection of pent-up demand after the anemic first half of the year.
Overall, the availability rate in office buildings rose by .3 points to 13.5 percent, while the average asking rent fell .9 percent to $50.51 per square foot, from the third quarter to the fourth quarter.
The largest deal of the quarter was a renewal by law firm Paul Weiss Rifkind Wharton & Garrison for 550,000 square feet at 1285 Sixth Avenue between 51st and 52nd streets.