No Summer Vacation for office leasing

Leasing remained strong through the normally slow month of August, according to a report by Colliers ABR, though another look at the market said it remained subdued.

The Manhattan class A vacancy rate dipped to 10.1 percent in August, down from 10.3 percent in July, due to strong direct leasing, while sublet activity remained flat.

A report by Grubb & Ellis had a somewhat different take, finding the market “quiet,” mostly because it was August. The vacancy rate held steady at 10.7 percent from the month before, it said.

“Overall vacancy and average rental rates were as flat in August as the temperatures: not too hot, not too humid,” the report said. “In fact, things were pretty mild.”

The report also noted that “availability rose slightly” when JP Morgan Chase put 588,000 square feet at 1 Chase Manhattan Plaza and 297,800 square feet at 95 Wall Street on the market. The move proved that “despite restoration of transportation and all the rebuilding Downtown, tenants are not yet ready to commit to staying.”

Other companies, including CB Richard Ellis and Cushman & Wakefield, did not release their reports by press time.


Midtown saw its class A vacancy rate drop to 9.8 percent, the first time it has fallen below the magic 10.0 percent figure since February 2003, the Colliers report said.

Activity was especially strong in Times Square where the vacancy rate dropped sharply to 10.1 percent from 11.7 percent, thanks to Ann Taylor taking 300,000 square feet at Times Square Tower and other deals.

“The Times Square class A vacancy dropped significantly,” said Robert Sammons, research director at Colliers ABR. “And all the other submarkets in Midtown are doing well generally.”

Sammons said the news that Time Warner will take back 200,000 square feet of space at Columbus Circle that it had planned to lease out “will help the Midtown West submarket.”

He said that the Rockefeller Center submarket was “struggling a little” because Time Warner gave up its old space there and the Associated Press moved to 450 West 33rd Street.

In the Plaza submarket, space being vacated by Bloomberg LP at 110 East 59th Street is “also an issue,” said Sammons. Cantor Fitzgerald announced it would take 122,000 square feet of the Bloomberg space, “but that’s only part of it,” Sammons said.

Class A average asking rents in Midtown edged up to $54.95 per square foot in August from $54.63 per square foot in July, the Colliers report said.

The Grubb & Ellis report found the Midtown vacancy rate dropping to 9.8 percent from 10 percent the month before, similar to the Colliers findings.

Midtown South

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Midtown South recorded some improvement in its class A vacancy rate in August as it dropped to 8.0 percent from 8.3 percent in July, the Colliers report said.

The largest block of space remains the almost 300,000 square feet available at 51 Madison Avenue from New York Life.

Average asking rents remained relatively flat at $29.17 per square foot, just 2 cents below the $29.19 per square foot recorded in July.

“There are a lot of firms looking in Midtown South for price reasons,” said Sammons. “There are a lot of older buildings being renovated, convenient transportation and a real mix of residential, retail and office space.”

The Grubb & Ellis report found the vacancy rate at 10.8 percent, up from 10.4 percent the month before, in contrast to the Colliers findings.


Progress continues to be made Downtown with the area’s class A vacancy rate falling to 11.3 percent from 11.6 percent in July, the Colliers report said.

The current vacancy rate is Downtown’s lowest since December 2001, when it was 9.6 percent.

However, JP Morgan Chase and Prudential space that is eventually being vacated was not factored into the Colliers report, because it hasn’t been put on the market yet.

“It’s really mixed,” said Sammons. “We’re probably talking about 1 million square feet of added space.”

Some Chase space 20 Pine Street will be converted to residential, easing the impact, however.

New and diverse tenants are also looking in the area, with WOR Radio signing a 15-year lease for 22,150 square feet at 111 Broadway last month and Newsweek looking in the area.

“Downtown is half the cost of Midtown when you factor in incentives, and it’s becoming hip,” said Sammons.

He said he is optimistic going forward.

“It might even drop to 10 or 10.5 percent vacancy, which is great for Downtown. It’s better than people probably thought it would be at this point.”

The class A average asking rent climbed for the fourth month in a row to $35.47 per square foot in August, up from $35.11 per square foot in July, the Colliers report said.

The Grubb & Ellis report found the vacancy rate steady at 13 percent from July to August.