The Real Deal New York

Manhattan office market has mixed August

Midtown submarket continues to shed tenants, but asking rents are up
September 13, 2016 10:26AM

10 Hudson Yards credit: Hudson Yards)

10 Hudson Yards (credit: Hudson Yards)

A number of high-profile Midtown leases signed in August can’t hide the fact that Manhattan’s office market has slowed down noticeably from 2015, new data released by CBRE show.

Manhattan’s overall net absorption — or, the square feet leased minus the square feet vacated — stood at negative 2.65 million square feet year-to-date. That’s a 131 percent increase over the 1.42 million square feet of negative absorption recorded in the same period last year. The availability rate rose slightly year-over-year to 11.2 percent from 10.6 percent, as did the average asking rent, to $73.72 per square foot from $70.08.

In Midtown, leases totaling 1.82 million square feet were signed in August – 41 percent above the August average of the past five years. Fashion shop Coach, which signed for 694,396 square feet at Related Companies TRData LogoTINY and Oxford Properties Group’s 10 Hudson Yards, accounted for the bulk of that increase. International law firm Dentons leased 207,371 square feet at 1221 Sixth Avenue and WeWork took 159,306 square feet at Kato’s 12 East 49th Street  .

Still, Midtown’s net absorption stood at negative 2.65 million square feet year-to-date. The availability rate rose by 1.3 percentage points to 12 percent, from 10.7 percent last August.

In Midtown South, leasing activity year-to-date fell, pushing net absorption into negative territory for the first eight months of 2016. The availability rate rose to 8.8 percent, from 8.2 percent last August and the average asking rent fell to $69 per square foot, from $71.57 last year, according to CBRE.

Downtown’s office market had the best showing among the three major submarkets. Net absorption was 950,000 square feet in the first eight months of 2016, a major improvement over the negative absorption of 1.19 million square feet recorded at this time last year. The availability rate fell to 11.1 percent in August from 12.3 percent last year, and the average asking rent rose to $57.37, from $56.33. — Konrad Putzier