Manhattan office leasing volume has whipsawed back and forth during the first six months of the year. Continuing that trend, last month saw a sharp pullback of activity.
Preliminary leasing totals for June show only about 1.4 million square feet of office space was leased in Manhattan’s three major markets. That’s far below the 4.9 million registered in April and the 3.5 million in May, data from commercial firm Cassidy Turley showed.
Depending on the final tally for June, it may be the slowest leasing month in 2012 — behind January, which saw 1.6 million square feet leased.
“The market’s been a little choppy,” said Kenneth Salzman, a senior managing director with commercial brokerage Lee & Associates. “There is still a fair amount of uncertainty in the market. There are a lot of short-term [approximately three-year] renewals being done in lieu of expansion.”
In fact, the largest relocation lease signed last month was for only for 68,000 square feet, Cassidy Turley figures showed. That was the City University of New York’s School of Professional Studies taking several floors at 116 West 32nd Street between Sixth and Seventh avenues.
In a sign that the figures may represent a bona fide (albeit slight) slowdown, the overall Manhattan availability rate — which measures the amount of space available now or in the next 12 months — rose by 0.2 points to 10.5 percent in June compared with May, according to Cassidy Turley. Yet despite that softness, asking rents rose by $0.49 per foot to $54.70 per foot.
Midtown
Even as the overall Manhattan office leasing market was tepid, landlords and tenants in Midtown seemed to be holding steady.
In fact, the total number of available blocks of 100,000 square feet or more — a metric often used to gauge the health of the market for large tenants — has remained about flat in Midtown over the past two years.
In May 2010 there were 43 blocks on the market. That number dropped to 39 just 12 months later. And this past May, there were 40, Cassidy Turley figures revealed.
According to Cassidy Turley, the largest available space in Midtown is 712,000 square feet at the Durst Organization’s
4 Times Square, which is being vacated by publishing powerhouse Condé Nast in 2014. The firm is, of course, moving to
1 World Trade Center.
Elliot Bogod, president of commercial and residential firm A&I Broadway Realty, said the slowdown might just be summer doldrums.
“We saw a lot of deals in May, but in June there has been a little bit of a slowdown,” he said, referring to Manhattan overall.
The availability rate in Midtown rose by 0.3 points to 11.2 percent in June, yet the asking rent rose by $0.41 per foot to $62.70 per square foot during the same time, Cassidy Turley data showed.
Midtown South
Although Midtown South’s availability rate rose by 0.1 points to 8.6 percent, it remained the tightest in Manhattan.
In an example of the types of deals getting done last month, an expanding marketing agency called Pulse Creative signed a five-year lease for 5,000 square feet on the third floor of 267 Fifth Avenue, an 11-story building at the corner of 29th Street. Gregory Cohen, president of the Cohen Group at the commercial and residential firm Rutenberg, represented the landlord and tenant in the deal.
He said approximately 10 to 15 companies came to look at the space over a month and a half, including hedge funds, advertising firms and apparel companies. But not all of them made strong enough offers.
“We received about five offers, a lot were lowball,” he said. “We asked for $47 per foot, then went to $40. We ask high then get people in and then we start negotiating.”
That rent range is in the ballpark for the Midtown South area, where average asking rents rose by $0.20 to $45.91 per square foot last month from May.
Downtown
Downtown — which has been the weakest market among the three for much of the past several years — got a lift last month. Indeed, it played host to Manhattan’s two largest deals.
Both of those leases were renewals inked by the City of New York. The first was for 373,000 square feet at SL Green Realty’s 100 Church Street and the second was for 208,000 square feet at 75 Park Place, owned by Jack Resnick & Sons.
Smaller firms — including some real estate players — contributed to the Downtown leasing totals, too. Bogod’s A&I Broadway Realty, for example, signed a lease for 2,000 square feet at 150 Broadway, relocating from 170 Broadway, which was sold in December 2011 and is being converted to a hotel. (A&I was forced out of two other Downtown locations — one of which was converted to condos, the other which was demolished for a new development.)
The brokerage’s new space is on the eighth floor at 150 Broadway, and had an estimated rent of $33 per foot, figures from CoStar showed.
Overall, June was a positive month for the Downtown market, with the availability rate declining by 0.2 points to 10.6 percent and the average asking rent rising by $0.21 per foot to $38.28 per foot.