New York City trails only Dallas/Forth Worth and Washington, D.C. in its recovery rate for office-using employment, according to a Studley office and space data report released yesterday.
The city has a 49.9 percent recovery rate compared to Dallas/Fort Worth’s 67.9 percent and Washington, D.C.’s 60.5 percent, the report states. The 49.9 percent rate indicates that the city has regained its position as one of the top performing economies in the U.S over the last several quarters, the report notes. New York City leasing exceeded its historical average of 7.3 million square feet for the eighth straight quarter, totaling 8.8 million square feet. Recent leasing activity at 1 World Trade Center and 250 West 55th Street indicates robust demand, the report shows. Class A rents increased for the third straight quarter, rising by 6.2 percent to $64.41 per foot. Total availability fell by 3.8 million square feet during the second quarter — the largest quarterly decline since the first quarter of 2008.
But nevertheless, optimism is waning due to the uncertainty hanging over the economy in the wake of the continued decline in home prices, slower economic growth and weak employment numbers, the report notes. State and local governments still face significant fiscal challenges, while Congress and the Obama administration continue to debate about the proper balance between revenue-raising measures and spending cuts.
While conditions in New York City are better than in other parts of the country, leasing activity has slowed slightly, with brokers noting some pullback in tenant interest in the last couple of months. Many companies are opting for more expensive spaces with a smaller, more efficient layout over a cheaper, larger space that is poorly configured, the report states.
Three segments that are registering leasing activity that is strong enough to significantly impact supply are the highest-end view spaces in The Plaza District, Grand Central and Rockefeller Center; big blocks of more than 100,000 square feet and the very tight Midtown South submarket, according to the report. — Miranda Neubauer