The Real Deal New York

Big lease renewals boost second quarter office leasing volume

July 06, 2012 01:00PM

The volume of Manhattan office leasing is up slightly in the second quarter, although not enough to offset the availability rate, according to Studley and Avison Young reports cited by Globe St. The studies credit big renewals for the slight growth, and blame global financial uncertainty for the increased vacancy.

Viacom not only renewed but expanded its lease to 1.6 million square feet at SL Green Realty Corp.’s 1515 Broadway. Morgan Stanley also expanded from a sublease to a 1.2-million-square-foot direct lease at Brookfield Office Properties’ 1 New York Plaza. Citigroup renewed its 475,000-square-foot lease at Boston Properties’ 601 Lexington Ave., and Random House renewed its 361,000 square feet at SL Green’s 1745 Broadway.

Vacancy rates across Manhattan held steady from last quarter. Jones Lang LaSalle put Midtown’s vacancy at 11.5 percent in the second quarter — the same as the first quarter. Midtown South’s vacancy rate was 7.6 percent. Downtown rate increased slightly from  9.6 to 9.8 percent, an increase that Avison Young attributed to the addition of more than 500,000 square feet at Silverstein Properties’ 4 World Trade Center.

“A few tenants may be holding back as concerns about the shaky economy, looming financial sector reform and the outcome of this fall’s election provide cause for caution,” according to Studley’s report. “Nevertheless, companies are not immobilized—they are picking their spots. Interest in appropriately priced quality product in high-caliber buildings with efficient floorplates, prime views and established landlords is strong.” [Globe St.]