UPDATED, 5:52 p.m., October 29: Midtown South continues to hold the torch for the Manhattan office market – the tech-tenant magnet was responsible for 26 percent of the top 50 deals by square footage signed in the third quarter, and has seen six triple-digit deals so far this year, according to CompStak’s effective rent report provided exclusively to The Real Deal.
Overall, the average effective rent – the rent paid adjusted for concessions such as free rent and tenant improvements – in Manhattan was $56.70 per square foot, showing a negligible change from last quarter.
In Midtown South it was $58.66, a year-over-year increase of 19 percent, marking the largest rental growth of any Manhattan market in recent years. The technology and creative tenant surge, combined with the opening of new luxury office buildings such as Edward Minskoff’s 51 Astor Place, have resulted in six leasing deals this year that closed at over $100 per square foot, according to CompStak.
Some of the high-profile deals in Midtown South in the third quarter include Maple Lane Capital’s lease for north of $100 a foot at 51 Astor Place and Samsung’s 46,437-square-foot lease at 837 Washington Street. The average concession package in the area for the quarter was just under 8 percent, a slight dip from last quarter.
In Midtown, the average Class A effective rent was $69.32 per square foot, static from last quarter. Midtown’s Class B sector, however, saw effective rents jump north of $50 per square foot. The average Midtown concession package for the third quarter was just under 9 percent. Notable deals include law firm Paul Hastings’ 190,000-square-foot lease at Tishman Speyer’s MetLife Building at 200 Park Avenue and digital advertising firm R/GA’s 170,000-square-foot lease at Brookfield Office Properties’ 450 West 33rd Street, also known as 5 Manhattan West.
Downtown saw a giant lease signing in the third quarter in the form of Hudson’s Bay Company’s 400,000-square-foot commitment to Brookfield Place, as well as website designer Squarespace’s 94,000-square-foot lease at Trinity Real Estate’s 225 Varick Street. The World Trade Center corridor saw average effective rents rise to $50 per square foot, but effective rents in the Financial District lag well behind in the mid-$30s per foot. Downtown’s average concession package was over 10 percent in the third quarter.
Correction: An earlier version of this story incorrectly stated the number of deals in Midtown South, due to an error in the source report.