Midtown South Class B office rents eclipse fancier Midtown’s

Market brightens at summer’s end with vacancy at 2008 levels, report says

TRD New York /
Sep.September 12, 2013 02:39 PM

The Manhattan office leasing market saw a surprisingly hot close to the summer. Vacancy in the borough now sits at 11.2 percent – the lowest since 2008, according to a monthly office market report from commercial brokerage Cassidy Turley, released today.

Increased activity in Midtown, where smaller financial firms have begun leasing up space, as The Real Deal has reported, buoyed the market, with vacancy also dropping to 11.2 percent in that market in August, down from 12.4 percent year-over-year. Average asking rents in the market were $70.68.

Downtown, firms fleeing high prices in tech-heavy hype-machine Midtown South and tonier but stodgier Midtown also nabbed a considerable amount of space, said Richard Persichetti, head of research at Cassidy Turley. By his estimate, 90 firms had relocated Downtown from the other Manhattan markets since the beginning of the year.

But while leasing volume Downtown increased, vacancy grew, with large spaces coming online in the market. While much of that space was absorbed, Persichetti said, it still brought vacancy to 13.6 percent, up from 10.4 percent in August 2012.

Meanwhile, the growth in trendy Midtown South continues unabated, with average asking rents rising 17 percent, to $67.13 per square foot from $57.26 year-over-year, and vacancy at 8.7 percent, more or less steady from last year’s 8.9 percent rate.

Most notably, Class B rents in the Midtown South submarket eclipsed those in tonier Midtown, as Persichetti observed, underscoring the cachet of the southerly market, where technology firms like Google make their home. Average asking rents for Class B space in Midtown South were $48.97 per square foot in August; comparable space in Midtown was going for an average of $47 per square foot.

Unlike financial tenants, which may crave marble flooring and Central Park views in order to woo investors, start-ups look for exposed beams and space they can customize themselves, Persichetti noted.

“The new media type tenants that are leasing space [in Midtown South]… the classification of buildings means nothing to them,” Persichetti said.

Related Articles

From left: 50 Hudson Yards, 341 Ninth Avenue, 30 Hudson Yards (background) with Google's Sundar Pichai, Amazon's Jeff Bezos and Facebook's Mark Zuckerberg (Credit: Google Maps and Getty Images)

Big tech puts Manhattan office leasing within reach of annual record

Amazon CEO Jeff Bezos (Credit: Getty Images)

Mapping Amazon’s current office and warehouse footprint in NYC

Today’s Northern NJ office sales volume is double 2018’s

Today’s Northern NJ office sales volume is double 2018’s

Clockwise from left: 1 New York Plaza, Hudson Yards, 341 Ninth Avenue and 55 Water Street (Credit: Google Maps, Wikipedia Commons, Getty Images)

These were NYC’s top office leases in November

From left: 295 Fifth Avenue, 3 World Trade Center, 50 Rockefeller Plaza (Credit: Google Maps, Wikipedia)

These were NYC’s top office leases in October

50 Rockefeller Plaza and Katten's Chris DiAngelo (Credit: Google and Katten)

Katten law firm moving to Rockefeller Center

An aerial view One World Trade Center in Lower Manhattan (Credit: iStock)

On anniversary of 9/11, the World Trade Center office market is now helping propel Downtown

Clockwise from top left: 733 Third Avenue, 24-01 44th Road in Long Island City, 83 Maiden Lane, and 1745 Broadway (Credit: Google Maps)

These were NYC’s top office leases in August