Midtown office rents started to drop in February: report

Tenants at Midtown office buildings paid 7% less than at the end of last year: CompStak

TRD New York /
Mar.March 14, 2016 02:35 PM

Despite reports suggesting that Manhattan office asking rents are at all-time highs, it appears office landlords in Midtown are losing the power to set rents on their properties – even in the market’s most prized corridors.

Office tenants at “top-quality” Midtown locations paid 7.4 percent less in February than they did at the end of last year, according to real estate research firm Compstak, with last month’s softening coming after a 13.3 percent increase over all of 2015.

The trend is the result of landlords like SL Green Realty, the city’s largest in the office market, having lowered asking rents in some of their most desirable buildings, according to Bloomberg. Others, like Scott Rechler’s RXR Realty, are keeping rents steady.

There has been a sense in recent months that some air has been let out of the Manhattan office bubble, despite both asking rents and leasing activity reportedly at healthy levels. The likes of SL Green CEO Marc Holliday, for instance, have raised the possibility of a downtick in job creation in the city potentially affecting its office market.

CompStak’s data notes that Midtown’s average taking rent – what tenants agreed to pay after landlord conessions like free-rent periods and space upgrade allowances — fell to just over $78 per square foot in February, compared to more than $84 per square foot at the end of last year.

Meanwhile, SL Green and Vornado Realty Trust recently lowered asking rents more than 10 percent – to $95 per square foot from $99 previously — for space in the middle floors of 280 Park Avenue, the 43-story Midtown office tower they co-own. The landlords also chopped asking rents for spaces in the building’s lower and upper levels.

In addition, SL Green dropped asking rents for space at both 10 East 53rd Street and 1350 Sixth Avenue, both in Midtown. Still, SL Green director of leasing Steven Durels said that across the company’s properties, “leasing velocity is extremely robust.” [Bloomberg]Rey Mashayekhi

Related Articles

The Daily News Building at 220 East 42nd Street and SL Green CEO Marc Holliday (Credit: Getty Images)

SL Green puts Daily News building up for sale

SL Green snags private-equity firm at
One Vanderbilt

SL Green’s locks in big bank lease at
Hudson Yards redevelopment site

The Daily News Building at 220 East 42nd Street and SL Green CEO Marc Holliday (Credit: Getty Images)

Jacob Chetrit buying Daily News building from SL Green for $815M

Fisher Brothers' Winston Fisher and 55 East 52nd Street (Credit: Getty Images)

Airbnb investor takes more pricey office space on Park Avenue

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

Clockwise from left to right: 50 Hudson Yards, Farley Post Office redevelopment, 1 Madison Avenue, and Apple CEO Tim Cook (Credit: Hudson Yards, Skanska, Google Maps, and Getty Images)

Apple on the hunt for enormous Manhattan office space