Leasing velocity rises to five-year high: Studley

New York /
Apr.April 01, 2010 11:43 AM

Manhattan office tenants leased up space at the fastest clip in five years during the first quarter of 2010 as they tried to lock in prices that many believed were at or near their lows in the current economic downturn, according to a report covering the quarter from commercial tenant advisory firm Studley. 

But overall asking rents declined and the availability rate rose sharply Downtown, the report says. 

There was 8.9 million square feet of office space leased in the first quarter in Manhattan, the highest volume of leasing since the first quarter of 2005, when 9.8 million square feet was leased in the borough, the Studley report, set to be released later this month, shows. 

The volume was up from the fourth quarter when 8 million square feet were leased and was ahead of the quarterly average of 7.2 million square feet, Studley reported. 

The leasing volume figures reported by Studley are higher than those seen in other market reports because the firm includes all space leased in its figures — including renewals — while other firms such as CB Richard Ellis and Cushman & Wakefield count only newly-leased space. 

The spike in activity was driven by tenants renewing their leases early thereby pumping up leasing activity and not by new demand coming into the market, the company senior vice president of research, Steven Coutts, said. Many tenants are still reducing space as they ink new deals and average asking rents are falling, he cautioned. 

“[The increase in leasing volume] is saying that we are close to the bottom if not at the bottom. But the question is how long will it be [there],” Coutts said. “Will it be a quick recovery or will it be bouncing along the bottom for four to eight quarters?” 

The industry is closely watching deal velocity, pricing and availability rates in order to identify the start of a recovery, but many point to job growth, which remains anemic, as the key to firming up the Manhattan office market. 

While velocity rose overall in the first quarter, overall asking rents declined from the fourth quarter of 2009. 

Manhattan asking rents fell by 2.7 percent to $49.14 per square foot. Midtown Class A rents were down in the first quarter by $0.17 per foot to $63.40 per foot. Since the$101.17 peak in the first quarter of 2008, Class A asking rents have fallen 37 percent, Studley figures show. 

Downtown the decline was sharper, with Class A asking rents dipping $2.01 per foot to $44.21 per square foot, and down 30 percent from the first quarter of 2008 when they reached $63.86 per square foot. 

The availability rate for Class A properties declined in Midtown by 1 point to 13.7 percent, while it rose sharply Downtown by 3.2 points to 10.8 percent, its highest level since mid-2006, the report shows.


Related Articles

arrow_forward_ios
The New York Life Sciences and Biotechnology Center at First Avenue and 41st Street (NY Life Sciences)
Life sciences leasing breaks annual record in five months
Life sciences leasing breaks annual record in five months
The commercial market was hit hard by the pandemic, and property tax revenue is expected to fall 5 percent. (iStock)
Tax bills show how much Covid devalued NYC real estate
Tax bills show how much Covid devalued NYC real estate
Richard Segal of Seavest Investment Group, David Marx of Marx Development Group and 902 Quentin Road in Brooklyn (Photos via Seavest Investment Group, Marx Development Group and VRMNY)
Westchester firm buys $54M Brooklyn medical building
Westchester firm buys $54M Brooklyn medical building
Real Estate EFTs See Investment Amid Pandemic Recovery
Why investors are rushing into real estate ETFs
Why investors are rushing into real estate ETFs
Manhattan sublease surge shows signs of slowing
Manhattan sublease scourge finally abates
Manhattan sublease scourge finally abates
Blooma founder Shayne Skaff (LinkedIn, iStock)
CRE fintech startup Blooma nabs $15M in funding
CRE fintech startup Blooma nabs $15M in funding
Distressed real estate investors are digging through commercial mortgage-backed securities to seize, fix and flip troubled properties. (iStock)
Distressed investors tap throwback strategy, target CMBS
Distressed investors tap throwback strategy, target CMBS
President Joe Biden (Getty, iStock)
What Joe Biden’s infrastructure plan holds for real estate
What Joe Biden’s infrastructure plan holds for real estate
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...