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

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

arrow_forward_ios
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 puts Daily News building up for sale
SL Green snags private-equity firm at One Vanderbilt

SL Green snags private-equity firm at One Vanderbilt

SL Green snags private-equity firm at One Vanderbilt
SL Green’s locks in big bank lease at Hudson Yards redevelopment site

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

SL Green’s locks in big bank lease at
Hudson Yards redevelopment site
Cash App CEO Jack Dorsey with 13 Crosby. (Getty, Google Maps)

Cash App takes new Soho office

Cash App takes new Soho office
341 Ninth Avenue, 55 Water Street and 1440 Broadway are 3 of the largest post-Covid sublease availabilities. (Google Maps, 55 Water, 1440 Broadway)

Manhattan sublease space at record high after 47% jump

Manhattan sublease space at record high after 47% jump
SL Green nabs $360M refinancing for Midtown office tower

SL Green nabs $360M refinancing for Midtown office tower

SL Green nabs $360M refinancing for Midtown office tower
From left:  Joseph Chetrit, 404 Fifth Avenue and WeWork CEO Sandeep Mathrani (Photos via Wikipedia Commons; Google Maps)

WeWork battles Chetrit Group over Midtown lease

WeWork battles Chetrit Group over Midtown lease
Chris Whittle and Tishman Speyer’s Rob Speyer with a rendering of The Wheeler at 181 Livingston Street (Photos via Getty Images and The Whittle School)

Here are the 10 biggest office leases in Brooklyn and Queens of 2020

Here are the 10 biggest office leases in Brooklyn and Queens of 2020
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...