Midtown South office vacancies hit 7-year low

Manhattan leasing market holds steady as rents continue to soar

From left: Richard Perischetti, 7 West 34th Street and One Vanderbilt in Midtown
From left: Richard Perischetti, 7 West 34th Street and One Vanderbilt in Midtown

Office vacancies in Midtown South in November reached their lowest level in seven years, according to a new report from commercial brokerage Cassidy Turley.

The Midtown South availability rate for office space reached 7.5 percent in November, a 0.1 percent month-over-month drop. The overall Manhattan office market did not budge, with an availability rate of 9.5 percent for the third consecutive month.

Richard Persichetti, Cassidy Turley’s vice president of research, pointed to the recent completion of One World Trade Center as contributing to the overall consistency of the Manhattan vacancy rate. The 3 million-square-foot tower brought more than 1.1 million square feet of available space to the market.

“It bodes extremely well that we added One World Trade to our statistics,” Perischetti told The Real Deal.

Manhattan’s average asking rent climbed 1.4 percent, or $0.98 per square foot, to $69.94 in November. That’s the biggest monthly hike in asking rents so far this year.

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The asking rent hike was most keenly felt in Midtown South. Rents at the area’s Class A properties jumped nearly 5 percent, or $3.51 per square foot, to $75.29, Cassidy Turley data show. Five of the six Class A buildings with direct available space hiked up rents.

Two new office leases exceeding 100,000 square feet were inked in November. Amazon signed a 17-year deal for a whopping 470,000 square feet at Vornado Realty Trust’s 7 West 34th Street. TD Bank took 200,000 square feet at SL Green’s 1 Vanderbilt. In October, only MUFG Union Bank’s deal for 210,000 square feet at the McGraw-Hill Building fell within that threshold.

Persichetti said he expects a few more large lease transactions to be finalized by year’s end.

“December is a high-volume month,” he said, “as the industry scrambles to wrap up its deals.”