It was a month of fluctuations for Manhattan office space in March as one very large deal in the Financial District closed after months of anticipation and several other blocks of space hit the market, according to a recent report by Colliers ABR.
As sublease availabilities appeared to be easing and the overall market stabilizing, three significant blocks hit the market last month for a total of almost 500,000 square feet.
Although sublease space is down compared to a year ago – 9.7 million square feet versus 11 million square feet, it is higher than it was five months ago.
Overall, however, the Manhattan class A vacancy rate has managed to improve to 10.6 percent from 11.3 percent a year ago.
While landlords have been leery of setting an asking rent during the past three years of economic downturn, as leasing activity has increased in the past few months they have started advertising prices once again, the report said. Average asking rents in March were at $46.87 per square foot, up almost $1 from the month before.
Midtown
A number of small deals in Midtown helped stabilize the vacancy rate at 10.1 percent, up just one-tenth of 1 percent from February, as two large subleases were added to availability in the Grand Central submarket.
CIBC put 227,000 square feet on the market at 425 Lexington Avenue, because it is consolidating into new space at 300 Madison Avenue. Law firm Clifford Chance placed 222,000 square feet on the market at 200 Park Avenue with plans to relocate to 31 West 52nd Street.
Class A average asking rents were up in all six Midtown submarkets, with the total Midtown figure hitting $54.05 per square foot, compared to $52.74 in February, the report said.
Midtown South
In Midtown South, the class A vacancy rate continued to improve, dropping to 5.5 percent from 6.0 percent the month before, the Colliers report said.
This was driven in part by a 74,425 square foot deal signed by HotJobs at 620 Avenue of the Americas in the Chelsea submarket.
Class A average asking rents ticked up slightly to $28.38 per square foot from $28.23 per square foot the month before.
Downtown
Downtown also saw improvement in March, with the class A vacancy rate dropping to 13.4 percent from 13.8 percent in February, the Colliers report said.
However, the market remained a bit rocky as new space became available with only one major deal offsetting total inventory, which grew and slowed the speed of the recovery.
In the largest deal of the month, Cadwalader Wickersham & Taft finally closed on its 460,000-square-foot lease at 1 World Financial Center, originally announced in September 2003.
On the other side of the coin, Telerate placed 84,000 square feet on the sublease market at 233 Broadway.
Average asking rents slipped a bit in March, to $33.89 per square foot from $34.28 per square foot in February.
There continues to be a significant number of tenants busily looking for space Downtown, partially due to the fact that the Small Firm Attraction and Retention Grant Program is due to expire at the end of this year, the Colliers report said.
Retail
On the retail front, asking rents soared during the first quarter, reaching pre-Sept. 11 levels, according to a report by the Real Estate Board of New York.
Overall, average asking rents in Manhattan for retail space rose 10 percent compared to the first quarter of last year, to $97 per square foot.
Manhattan’s 57th Street corridor showed the largest increase, up 55 percent from the year before.
Asking average rents on 57th Street between Fifth Avenue and Park Avenue hit $850 per square foot, according to the report.
Available retail space in Manhattan declined 19 percent, with more than 2.7 million square feet being absorbed. Downtown specifically saw available space drop 35 percent, demonstrating retailers’ renewed interest in the area.
In other areas, asking rents for retail space on the East Side increased by 21 percent, to $155. Midtown asking rents increased by 12 percent, and Midtown South, which includes SoHo, as well as the West Side, showed increases of 7 percent.
“While the numbers have been slowly rising since Sept. 11, this is the first time we’ve seen double- digit increases in asking rents in several areas for more than two years,” said Steven Spinola, president of REBNY. “It’s great news for the retail market in Manhattan.”