Manhattan office leasing cools in October as subleasing climbs

MUFG Union Bank lease at McGraw-Hill Building was month’s sole 100K sf-plus deal

From left: Richard Persichetti, 1221 Sixth Avenue and 909 Third Avenue
From left: Richard Persichetti, 1221 Sixth Avenue and 909 Third Avenue

Despite a slight office market slowdown throughout Manhattan in October, subleasing is on the rise, according to a monthly report from commercial brokerage Cassidy Turley.

Four blocks of sublease space exceeding 45,000 square feet hit the market last month. For the first time in five months, the available supply of sublease grew to more than 4.5 million. Three of the four blocks, including space at 711 Third Avenue and 909 Third Avenue, are located along the Third Avenue corridor.

“It was a slow month for leasing, but there an uptick in sublease space,” Richard Persichetti, Cassidy Turley’s vice president of research, marketing and consulting, told The Real Deal. “There is no indication of a slowdown continuing for the next two months.”

There was only one new office lease exceeding 100,000 square feet signed in October. It was MUFG Union Bank’s deal for roughly 210,000 square feet at the base of the Rockefeller Group’s McGraw-Hill Building at 1221 Sixth Avenue, as previously reported.

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The overall availability rate held steady at 9.5 percent. The availability rate in Midtown was only slightly higher, at 9.9 percent.

Asking rents at Class A buildings averaged $76.14 per square foot, up 7.1 percent year-over-year. Meanwhile, asking rents at Class B buildings climbed by 6.7 percent to an average of $58.24, the report said.

For eight straight months through September, there was positive absorption Downtown, meaning more companies were expanding and adding office space rather than downsizing or subleasing space. There was a negative 67,835 square feet of absorption last month, following a total of 3.1 million square feet of positive absorption in the eight months preceding it.

“Downtown has been performing phenomenally over the past 18 months, so I don’t see this as a big indicator,” Persichetti said.