Office rents decrease to $59 psf on Park Ave.

March 07, 2011 02:05PM

Thanks to the economic downturn, rents for office space on Park Avenue declined to $59 a square foot in the fourth quarter of 2010, compared to $118 a square foot in the first quarter of 2008, according to a new study by Jones Lang LaSalle. The $59 decrease in Park Avenue rents was the greatest of any submarket in Midtown. On Sixth Avenue, for example, average rents fell only $35, according to the study. “It just happened to be that a lot of the industry that was most impacted by the recession was financial services, and financial services in Midtown had big chunks of space on Park Avenue,” Steven Durels, who handles leasing for SL Green, which owns 100 Park Avenue, told the Wall Street Journal. “And some of those tenants dumped their space at discounted rents because they wanted to mitigate their carrying costs.” However, rents throughout the city have started to improve as businesses have begun hiring again, boosting job growth. Deals for space at some of Park Avenue‘s toniest addresses are regularly topping $100 a square foot. But office leasing volume still remains below the levels hit during the boom years. Midtown’s overall vacancy rate was at 11.7 percent at the end of last year, compared with 5.1 percent at the end of 2007, according to Reis. The submarket that includes parts of Upper Park Avenue ended 2010 with a 13.9 percent vacancy rate, compared with a low of 4.1 percent in the fourth quarter of 2007. [WSJ]