says Murphy. Midtown has taken a pause.
NEW YORK CITY-“The real story is in Midtown South and it has been for most of 2012,” says Pamela Murphy, CBRE’s senior vice president for research and consulting. “The market in Manhattan is preferred by many technology firms.” Murphy says the class B loft space available in Midtown South is attractive to tech firms. Also, price-sensitive start-up companies are finding space at lower costs than in Midtown. Pricing was the initial draw and then the cluster effect attracted more companies.
The top transactions in Midtown South are all tech firms. The list includes Medidata Solutions Worldwide with 98,585 square feet at 350 Hudson St., Google with a 94,237-foot expansion at 75 Ninth Ave., and IBM World Trade Corp., which took 54,045 square feet at 63 Madison Ave.
Murphy says leasing activity in Midtown has not been quite as strong because financial services companies have taken a cautious posture due to overall economic conditions.
October was above average with 1.21 million square feet of leasing. But year-to-date leasing trails 2011 levels by 22%. “There’s been a pause in Midtown, but there’s been an increase in renewal activity,” Murphy says.
Downtown posted a strong October, due in part to the City of New York taking nearly 132,000 feet at 100 Church St. Other major leases included Nielsen Media Research, which took 115,207 feet at 85 Broad St. and XL Insurance with nearly 105,000 square feet at 1 World Financial Center. Downtown’s 540,000 square feet of leasing activity was 64% above the market’s five-year monthly average of 330,000 square feet.
“The market did see a large influx of space that we expected to see at the World Financial Center,” Murphy says. “There was a significant negative absorption for the month, which we had been expecting for quite some time.”
Overall, Manhattan registered 2.27 million square feet of leasing activity in October, 13% above the previous month’s 2.01 million square feet and 55% ahead of the 1.46 million square feet logged during October 2011.
“It’s important to note that, while we notice a pause and a certain caution with a lot of financial services firms, which is an important sector for Manhattan, there are other sectors filing in the gap in certain markets,” Murphy says.