The Real Deal New York

Manhattan office leasing activity dips, but asking rents hit post-recession peak

November leases fall 21% below five-year average, while asks top $71 psf: CBRE

December 10, 2015 06:20PM
By Rey Mashayekhi

300 Park Avenue

300 Park Avenue in Midtown

Manhattan office leasing activity in November was considerably lower than its five-year monthly average, according to commercial brokerage CBRE’s monthly market report. On the other hand, average asking rents in Manhattan topped $71 per square foot for the first time since the global financial crisis.

Leasing activity totaled 1.76 million square feet in November – 21 percent below the five-year average of 2.2 million square feet. Office availability in Manhattan, while slightly up from October, remained “virtually unchanged” from November of last year.

Average asking rents in Manhattan, meanwhile, were up 7 percent from the same period last year – hitting $71.09 per square foot for the first time since June 2008, the report said. Vacancy and availability rates of 7 percent and 10.7 percent, respectively, were also virtually unchanged from both the month-over-month and year-over-year periods.

In terms of Manhattan office submarkets, Midtown saw 1.06 million square feet of leasing activity in November – 19 percent below the five-year average of 1.31 million square feet. Leasing activity for the year-to-date, however, was up 7 percent from the first 11 months of last year at 16.23 million square feet.

The largest leasing transaction in Midtown last month was WeWork’s nearly 110,000-square-foot deal at Tishman Speyer’s Colgate Building at 300 Park Avenue.

Average asking rent of $78.62 per square foot in Midtown was up 6 percent from November 2014, according to CBRE, while tight availability in the neighboring Midtown South market drove asking rents in Times Square South district to a “record high” of $58.37 per square foot.

Midtown South is also seeing somewhat of a slowdown in leasing activity, however – 385,000 square feet in November, 12 percent below the five-year average of 440,000 square feet. Nearly 5.3 million square feet of leases were signed in the year-to-date — down by 9 percent, from more than 5.8 million square feet through the first 11 months of 2014.

The largest leasing transaction in the submarket was architecture firm Perkins Eastman’s 77,000-square-foot renewal at the Winter Organization’s 115 Fifth Avenue.

The city’s tightest office market continues to get tighter, with a 4.8 percent vacancy rate in Midtown South down from 5 percent vacancy a year ago. Average asking rents of $70.80 per square foot in November were almost unchanged from October – but up 5 percent from $67.28 per square foot in November 2014.

In Downtown, 311,000 square feet of leases signed last month was 32 percent below the five-year average of 455,000 square feet, while year-to-date leasing activity of just over 4 million square feet dropped a considerable 37 percent from nearly 6.4 million square feet through the same period last year.

The largest office lease signed in the Downtown market last month was the Teachers’ Retirement System of the City of New York’s 191,000-square-foot renewal and expansion at the massive, 3.5 million-square-foot office building at 55 Water Street.

Both availability and vacancy rates increased slightly from a year ago — to 9.2 percent and 12.1 percent, respectively – though the average asking rent of $56.36 per square foot jumped by 10 percent from $51.41 per square foot in November 2014.

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