Manhattan office market holds steady in dog days of summer

The Manhattan office market held steady in July, as demand Downtown remained strong and Midtown benefitted from an uptick in finance sector jobs.

Manhattan Class A office rents hit an average ask of $75.25 last month, up 8.6 percent from $69.26 in the same period last year, according to commercial brokerage Cassidy Turley’s latest Manhattan Office Market Report. The borough had an absorption of 1.67 million square feet, according to the report. Overall availability tumbled 40 basis points to 9.7 percent – the lowest since September 2008.

“July and August typically are pretty tepid months, so the fact that availability continued to drop was kind of encouraging,” said Richard Persichetti, Cassidy Turley’s vice president of research, marketing and consulting. “We just finished our fifth consecutive quarter of positive absorption. That’s a big testament to demand, which continues to outpace space returns.”

Downtown led the charge in July, with availability dropping 60 basis points to 10.3 percent – the market’s lowest point since 2011. The area’s recorded 543,897 square feet of positive absorption was driven by Jane Street Capital’s lease of 117,000 square feet at 250 Vesey Street and MediaMath’s take up of 106,000 square feet at 4 World Trade Center.

Though Downtown still remains a comparative bargain to Midtown and Midtown South, Class A asking rents ticked up 4.8 percent year-over-year in July to $55.07 per square foot, up from $52.54.

Midtown posted another solid month in July, with availability falling 40 basis points month-over-month for the second time this year — a dip of 10 percent. Over 1 million square feet of positive absorption was recorded, bringing the year-to-date total to over 2 million square feet. Still, smaller transactions accounted for most of the market’s activity, with only four leases larger than 50,000 square feet signed.

“I think everybody’s waiting for the financial services industry to bounce back for Midtown rents to really take off and reach 2007 levels,” Persichetti said. “The employment data goes up a little one month then goes back down. I think we need something like three solid months of growth before we can make a full-fledged statement.” In June, the sector added roughly 7,800 jobs.

Class A asking rents in Midtown, meanwhile, rose 6.8 percent to $82.70 in July, up from $77.40 during the same period last year.

In Midtown South, availability dropped 10 basis points in July and is still down 60 basis points since April, when 1.2 million square feet were added to the market. Availability fell to lower than 5 percent, and 115,503 square feet were absorbed, led by Yelp and William Morris Endeavor, which both signed on at 11 Madison Avenue. Those two leases alone amounted to 221,625 square feet. Class A asking rents rose 5.4 percent to $70.84 per square foot in July, from $67.18 in July of 2013.