Midtown’s large-block availabilities surge

In Manhattan, new leases down 34 percent, year over year
By Adam Pincus | July 12, 2012 01:30PM

The number of large blocks of space in Midtown has grown rapidly since last fall as landlords and tenants with too much space have made available floors far faster than the market can absorb them, a report released today by CBRE Group during its second quarter media briefing, shows.

Today, tenants hunting in the Midtown market can choose from among 40 blocks of space larger than 100,000 square feet, the CBRE statistics show. That’s a 38 percent increase from November 2011, when there were only 29, and that followed several months of declines in large blocks of space.

Meanwhile in Manhattan overall, the volume of new leases (representing tenants moving into a new location) dropped by 34 percent in the first half of 2012 to 10.3 million square feet, down sharply from 15.7 million square feet in the first half of 2011, CBRE figures show.

However, other segments of the market were performing well, Matthew Van Buren, president of the tri-state region for the California-based global brokerage firm, said. In general, the situation in New York’s office market was mixed.

“The overall Manhattan picture [is] lower velocity, slow, steady rent growth, and an uptick in availability,” he said during the briefing at the firm’s Midtown offices.

The tenor of the report from CBRE was similar to Cushman & Wakefield’s second quarter media briefing on Tuesday, where brokers said the Midtown South market was continuing to outshine the other markets.

The CBRE information shows the average asking rents in Manhattan rose last month to $55.64 per square foot from $54.95 per foot in May, while the availability rate ticked up by 0.1 points last month to 11.2 percent.

For Midtown, Van Buren said a handful of large blocks hit the market this year, including about 750,000 square feet at Boston Properties’ under-construction tower at 250 West 55th Street, and additional space at 100 West 33rd Street. But he said there were not many more blocks in Midtown coming on line.

“That is all that’s really due to hit,” he said. “It’s not like it’s a tsunami, it’s really just the timing of how it’s hitting.” The timing helped push the availability rate in Midtown to 12 percent in June, up from 11.7 percent in May. In that same period, average asking rents rose to $64.56 per foot from $63.98 per foot.

In Midtown South, the availability rate was flat last month at 9.1 percent, and the average asking rent rose by $0.50 per foot to $51.73 per foot compared to May. In Midtown South, there are 10 blocks of space 100,000 square feet or larger, the same as in November.

Meanwhile, in the Downtown market, the availability rate in June declined by 0.2 points to 10.8 percent, and at the same time the average asking rent also fell, by $0.24 per foot to $39.29 per square foot, the CBRE figures show. In Lower Manhattan, there were 13 blocks of space 100,000 or larger, up from 9 in November.