Midtown commercial leasing volume drops

Brokers say business is slower, but numbers are deceptively low

TRD New York /
Mar.March 09, 2012 05:30 PM

In the first two months of 2012, 2.9 million square feet of commercial leasing activity was recorded in Manhattan, trailing the year-over-year numbers by 31 percent, according to numbers from CBRE Group’s Manhattan Marketview Snapshots, released today.

February saw 190,000 square feet of negative absorption, although February’s 1.47 million square feet of total activity was a slight increase from January’s 1.44 million square feet. Asking rents in Manhattan rose negligibly, by $0.16 per square foot, to $54.40, the report says.

The most precipitous drop in leasing was in the Midtown submarket, where the 810,000 square feet of leasing in February was a drop of 31 percent compared to the five-year average of 1.17 million square feet per month. The first two months of 2012 saw nearly 50 percent less leasing activity than the same months in 2011, the report shows. Meanwhile, the availability rate in Midtown increased by 0.3 percent, to 11.7 percent year-over-year.

The biggest vacancy to come to market was at 100 West 33rd Street, a 1.1 million-square-foot building atop the Manhattan Mall, at Sixth Avenue. Bank of America will vacate 110,000 square feet at the building in May, according to published reports, and landlord Vornado may have begun quietly marketing the space. Vornado just completed a $325 million refinance of the building Tuesday, according to a statement from the real estate investment trust. Vornado declined to comment.

According to an industry source who requested anonymity the seemingly dire leasing numbers for Midtown are deceptive.

“We expect things to pick up, if not in the second quarter, then in the second half of the year,” the source said, noting that January is a historically slow month for commercial leasing. “The decision-makers are all being very cautious, and you won’t see that break… until the presidential election [in November],” the source indicated.

John Pavone, a vice president at commercial brokerage UGL Services, agreed that timing might be creating an artificial slump in the market. While he did not agree that January is generally a slow month, he said he was “actually quite active with several tenants,” adding, “I’m just waiting for them to close… It’s more of a timing thing.” Last January, the Midtown submarket saw 1.82 million square feet of leasing, up from 1.31 million square feet year-over-year, and overall Manhattan leasing activity also grew — up 250,000 square feet year-over-year, according to CBRE’s market snapshot for that month.

Other brokers saw more of slowdown. “Things have quieted down in February and into March,” said David Lebenstein, senior managing director at Cassidy Turley. “Some of our agents say there are fewer offers and fewer showings,” he added.

The anonymous source noted that the statistics may have been thrown off by large availabilities, such as the BofA space on 33rd Street coming to market.

Lebenstein agreed. “There are always elements of what we call hidden space,” involved in research about leasing numbers, he said, meaning space that is either taken or made vacant that was not accounted for in previous research due to methodological idiosyncrasies. “But it does feel slower,” he said. “There has been less activity.”

The Midtown South and Downtown markets fared better, according to the CBRE report. In Midtown South — the submarket with the lowest vacancy rate in the country, according to previous numbers from CBRE — there was 670,000 square feet of leasing year-to-date, up 18 percent from the same period in 2011, when there was 570,000 feet of activity. The availability rate dropped 0.5 percent month-over-month in February, to 9.1 percent. The average asking rent in Midtown South rose by nearly a $1 per square foot, due mostly to some pricey space at 11 Madison Avenue coming online, the report says. Asking rents at 11 Madison are $83 per square foot, according to CoStar.

Downtown, leasing was on par with the five-year monthly average in February, with 320,000 square feet of deals, according to the report. ITG’s 132,000-square-foot lease at Brookfield Properties’ 1 Liberty Plaza led leasing Downtown, where the vacancy rate was 10.6 percent in February, the numbers show.


Related Articles

arrow_forward_ios
MetLife Building and Matt Van Buren, CBRE’s tri-state president (Getty, CBRE)

CBRE closes 2 offices, expands presence at MetLife HQ

CBRE closes 2 offices, expands presence at MetLife HQ
Clockwise:  CBRE's Michael Remer, Richard Hodos and Joel Stephen with the Wizarding World Building at 935 Broadway (Images via CBRE)

CBRE’s Hodos and other Muggles win REBNY award for Harry Potter deal

CBRE’s Hodos and other Muggles win REBNY award for Harry Potter deal
(iStock)

Look out below: Major real estate services firms brace for falling earnings

Look out below: Major real estate services firms brace for falling earnings
Brookfield Property Partners' Brian Kingston, Silverstein Properties' Larry Silverstein and Empire State Realty Trust's Anthony Malkin (Getty)

Real estate firms lead cautious return to NYC offices

Real estate firms lead cautious return to NYC offices
Hana CEO Andrew Kupiec, The Real Deal's Hiten Samtani and Hana's EVP of Occupier Solutions Georgia Collins

The REInterview: How flex space could upend supply-demand dynamics in the office market

The REInterview: How flex space could upend supply-demand dynamics in the office market
Matthew James (Credit: ABC)

First black “Bachelor” for ABC comes from real estate world

First black “Bachelor” for ABC comes from real estate world
“We’re not in the business of land-grabbing:” Hana CEO on the future of flex space

“We’re not in the business of land-grabbing:” Hana CEO on the future of flex space

“We’re not in the business of land-grabbing:” Hana CEO on the future of flex space
Director of Research & Analytics for CBRE Tri-State Nicole LaRusso, Vice Chairman & Director at Savills David Goldstein, and President of Newmark Knight Frank's Tri-State region David Falk

“For years we all laughed at them”: office brokers warm to virtual tours

“For years we all laughed at them”: office brokers warm to virtual tours
arrow_forward_ios

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

Loading...