Last month, JPMorgan Chase listed three noncontiguous floors for a total of 67,912 square feet at 277 Park Avenue, between 47th and 48th streets.
Other blocks came back to the market last month as well, data from CoStar Group shows. Pharmaceutical giant Pfizer listed 321,747 square feet at 150 East 42nd Street, and fragrance manufacturer Coty listed two floors of about 52,000 square feet each at 1 Park Avenue.
Joseph Harbert, COO of the New York region for Cushman & Wakefield, said there has been “a real slowdown in the financial service sector.”
But unlike in late 2008, he said there is no rush to list huge blocks of space.
“It’s a trickle, like Chase at 277 Park. That’s three disparate floors for 22,000 square feet each. It’s not a major statement about Chase’s holdings in New York. It’s not dramatic — it’s a trickle,” Harbert said.
Companies that are listing space are undoubtedly responding to the uncertain economy. A report released last month from the city’s Independent Budget Office provided more short-term bad news for leasing brokers. The analysis said revenues at the big, publicly traded Wall Street firms would fall again this year, by an estimated 5 percent, and that there would be no growth in 2012 for wages or bonuses in the securities sector.
“Real estate is led by business, and if [a company] can’t afford to be in the market now, they will hold off,” said Douglas Levine, an associate vice president at tenant brokerage UGL Services.
Still, despite economic concerns, the midtown availability rate fell 0.1 points to 11 percent. At the same time, the asking rent in midtown rose sharply, up $1.59 per foot to $60.82 per square foot, Cassidy Turley figures showed.
One example of activity was law firm Pomerantz Haudek Grossman & Gross, which signed a new, 14,320-square-foot lease at 600 Third Avenue, where the asking rent was $63 per square foot, said David Berkey, executive vice president for landlord L&L Holding. The law firm took the entire 20th floor and part of the 21st floor.
Ted Rotante, executive managing director at Colliers International, represented the law firm. He did not respond to a request for comment.
Berkey said the Manhattan-wide stall was not permanent, and was part of the “ebbs and flows in the marketplace. While we acknowledge the slowdown, we don’t think it will last.”
More than a year after Google’s purchase of the 2.9 million-square-foot 111 Eighth Avenue in late 2010, a sea change has slowly evolved in Midtown South, said Bruce Mosler, chairman of global brokerage at Cushman & Wakefield.
The neighborhood with smaller loftlike buildings now popular with tech firms was once just a step-child to midtown. But it has now grown into its own market, and “is no longer susceptible to the peaks and valleys of midtown.”
“The Google [purchase] sealed the deal. That fact of the matter is other companies want to be there because of Google. And rents are beginning to spike there even as rents are relatively flat in Midtown,” Mosler said.
One tenant that was already in the market is planning to stay put. Travel Planners, which manages bulk accommodations for attendees of associations and trade shows, is in the process of renewing its lease at 381 Park Avenue South, at 27th Street, for another seven years, ATCO’S Goldich said.
When finalized, the travel firm will remain on the entire 14,000-square-foot third floor, where the asking rent was $42 per square foot, Goldich said.
Meanwhile, the asking rents in Midtown South continued to rise last month, reaching $43.69 per square foot, up $0.57 per foot from the prior month. At the same time, the availability rate ticked up slightly, by 0.2 points, to 9 percent in March, the data from Cassidy Turley showed.
Lower Manhattan was hit last month with the highest increase in the percentage of available space among Manhattan’s three markets, the Cassidy Turley statistics showed.
That increase was driven in part by landlords listing blocks of direct space such as 85,000 square feet at 32 Old Slip. Other new listings were 70,000 square feet at 199 Water Street and 58,000 square feet at 17 State Street.
In addition, the German lender Commerzbank, which recently signed a renewal lease at 2 World Financial Center for four floors, turned around and put one of those floors on the sublease market last month. The newly listed space is 43,374 square feet, data from CoStar showed.
Those parcels contributed to driving the downtown availability rate up to 11 percent in March, up 0.6 points over the prior month. At the same time, the average asking rent rose to $38.79 per foot in March, a $0.50 per foot bump up from February.
Bruce Weinberg, executive managing director at Cassidy Turley, said financial firms normally drive about 35 percent of the leasing, but were down about 10 percent last quarter, impacting the whole market but especially Lower Manhattan.
“Downtown is usually the last sector in Manhattan to fully recover, so it is nothing surprising,” he said. But, he added, media and technology are stepping in to fill some of the financial space, which could help strengthen the leasing market overall by diversifying the tenant base.
In fact, the Google deal in Chelsea is actually having an impact downtown, brokers said. As the search engine firm takes back more space in its own building on Eighth Avenue, according to brokers, tenants there have been sent packing, hunting for a new home.
L&L’s Berkey said some “who need to do something because of Google” have come calling to his loftlike 973,000-square-foot property at 195 Broadway, between Dey and Fulton streets. But he had no signed deals to report yet.