Manhattan office asking rents fell by their largest amount in four months in March even as leasing volume increased, according to data from commercial services firm CB Richard Ellis.
Average asking rents fell by 51 cents per foot in March to $48.27 per square foot, the steepest decline since rents fell by 73 cents in November 2009 to $49.17 per foot, CBRE data shows.
Over the previous three months, the average asking rent in the market fell by an average of only 14 cents per foot. The flattening in the decline in rents was seen as an indicator of stability in pricing.
Matthew Van Buren, executive vice president at CBRE, said the fluctuations in asking rent may just be individual large deals swaying the market.
“We still think rents have bottomed out,” he told The Real Deal before the firm’s first-quarter 2010 leasing briefing for reporters in CBRE’s Midtown offices. “[Net] effective rents have been pretty stable for the past six months. We still think there is not some new ominous second dip [that will hit the market].”
Net effective rents measure the actual taking rent the tenant pays, as opposed to the asking rent which is what the landlord says it wants for the space.
At the same time, Manhattan leasing volume increased to 1.7 million square feet in March from 1.5 million square feet a month earlier, and was more than double the 840,000 square feet leased in March 2009, the firm reported.
Year-to-date new leasing in 2010 was 5.2 million square feet, far ahead of the 2.7 million square feet leased in the first quarter of 2009, Van Buren said.
The availability rate, tracking space vacant or that will become available over the next 12 months, was 14.3 percent, about the level it has hovered at for more than six months.
In a special report focused on the Downtown office market released today, CBRE said for the first time since the start of the downturn, the availability rate in that market will [not did, yet] surpass the level in Midtown due in large part to the long-expected return of unneeded office space to the market from financial firms Goldman Sachs and American International Group.
The availability rate Downtown in March was 13.5 percent, for Midtown it was 14.6 percent and for Midtown South it was 14.4 percent, CBRE data shows.
With the return of an expected 1.5 million square feet to the Downtown through 2011, the availability rate is expected to rise by 1.9 points, CBRE data indicates, which will translate to an availability rate of 15.3 percent.
But CBRE did not expect the availability rate to hit the peak it reached in the mid-1990s, when it was 25 percent, or even touch the 16.8 percent availability rate of the last recession, the report says.