First rise in Class A Midtown asking rents in over two years

By Adam Pincus | July 15, 2010 11:00AM

Grubb & Ellis’ Joseph Swingle, 1411 Broadway (building photo source: PropertyShark)

In
a sign that the office leasing market is strengthening, asking rents in
Midtown Class A buildings rose for the first time in two and a half
years during the second quarter, but still overall asking rents for
Manhattan office space continued to decline, a new report from
commercial service firm Grubb & Ellis says (see full report
below). 

Asking rents in Midtown Class A properties rose by 39 cents
per square foot to $69.17 per foot, the first jump in 10 quarters, the
report indicates. But as an indication that the broader market remained
soft, asking rents for all Class A buildings fell by $1.04 per foot to
$62.87 per square foot, dragged down by Downtown where asking rents
fell by $2.06 per foot to $45.72 per foot. 

Joseph Swingle, executive managing director at Grubb & Ellis, said
the latest report shows the market is beginning to turn around. 

“It is almost confirmation that in Midtown and Midtown South we have
hit bottom. I think the data supports that,” he said. But he added that
Downtown the situation remained weak. “We have a long way to go and we
are going to need some real employment gains before we see that start
to reverse.” 

Swingle said in general landlords were having a harder time leasing up
their Class B space in older buildings, where asking rents in Manhattan
dropped $1.19 per square foot to $45.99 per foot. 

“I would say for the better quality space, that is what is tightening
up. There is still quite a bit of [Class] B and B-minus space. We are
not seeing the activity we would like,” he said. 

Overall, the vacancy rate showed its first improvement in nine
quarters, driven by large deals such as the renewal and expansion of
Jones Apparel Group into 380,000 square feet at 1411 Broadway, Grubb
& Ellis reported. 

The overall Manhattan vacancy rate fell to 9.7 percent last quarter,
down .1 points from the first quarter and the first dip in more than
two years.

report