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Manhattan office leasing volume hits 13-year highs

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Manhattan office leasing volume hits 13-year highs

| architecture, architecture jobs, construction, Design, Hiring trends, jobs, recession | July 12, 2011

Activity in first half of year soars 40% over 2010 level and in May and June sets a new record; in good news for tenants, rent increases are still seen as modest.

Leasing activity in Manhattan in the first half of the year totaled 17.6 million square feet, the best six-month performance in 13 years and a 40% surge from the corresponding period of 2010, according to Cushman & Wakefield Inc. Meanwhile, activity in the last two months of the quarter was the strongest on record.

In yet another bullish sign, absorption—which measures the net change of occupied space in a given time—was a positive 3.2 million square feet. That marked the first time that measure has been positive for the first six months of the year since 2007.

“Leasing activity has been pretty impressive,” said Joseph Harbert, Cushman & Wakefield’s chief operating officer for he New York metro region.

All that activity helped shrink the overall average vacancy rate to 9.4% by the end of last month from 10.8% in the same period last year.

The surprising news for landlords—and the good news for tenants–was that despite the surge in deal volumes, the overall asking rents grew a mere 2% to an average of $55.52 a square foot.

“Increases are modest compared to the activity,” said Mr. Harbert. “This is still a relatively good [leasing] opportunity for tenants.”

Brokers at Cushman’s quarterly press briefing suggested several reasons for the disparity. One noted that the 9.4% vacancy rate still favors tenants and that once it hits 8%, which is widely considered a point where there is negotiating equilibrium between landlords and tenants, rents should shoot higher.

Another suggested some landlords were keeping quality space off the market, waiting for the market to further improve so they could fetch even richer numbers. Yet, a third suggested that the economy was still shaky enough where landlords didn’t want to quibble over price, especially not with credit-worthy tenants looking to lease significant blocks of space.

Some sub-markets in Manhattan are already seeing major increases. Mr. Harbert said rents in the Plaza District, the tony enclave favored by hedge funds and financial firms, were growing at twice the pace of the average, up 20% from the market trough.

Rents in the downtown market advanced more than in the other two business districts–midtown and midtown south. They jumped 4.2% to $39.38 a square foot. The market got a big boost from Condé Nast signing a 1 million square foot deal at 1 World Trade Center.

Source: Crain’s New York Business

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After working at various design practices on a full-time and freelance basis, and starting his own design firm, David McFadden saw that there was a gap to be filled in the industry. In 1984, he created an expansive hub for architects and hiring firms to sync up, complete projects, and mutually benefit. That hub was Consulting For Architects Inc., which enabled architects to find meaningful design work, while freeing hiring firms from tedious hiring-firing cycles. This departure from the traditional, more rigid style of employer-employee relations was just what the industry needed - flexibility and adaption to modern work circumstances. David has successfully advised his clients through the trials and tribulations of four recessions – the early 80’s, the early 90’s, the early 2000’s, and the Great Recession of 2007.

One Response to "Manhattan office leasing volume hits 13-year highs"
  • NY T-Bone Stip 16 oz steak July 31, 2011

    This is a first step in the right direction for NYC. 20-30 years from now as I write this, things will be back to 1999-2000 levels, my father always stated things run in cycles, I believe were on our way to becoming great. At least I keep my fingers crossed…

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