JLL Says NYC Major Lease Deals on Rise

NEW YORK CITY—JLL reports that leasing activity in New York significantly increased in the first quarter of this year as compared to a year earlier. In fact, large lease deals of at least 100,000 square feet doubled during that time period.

The brokerage firm states that the city recorded 14 office lease transactions of at least 100,000 square feet in the first three months of this year, compared to seven during the first quarter of 2013. Despite the plethora of major deals, Manhattan's overall vacancy rate remained unchanged at 11.1% in the first quarter of 2014. The city's Class A vacancy rate rose to 12.4%, an increase of 2.5% (or 0.3 percentage points) from 12.1% in the fourth quarter of 2013.

“Building owners are negotiating with multiple tenants for the same space,” says Peter Riguardi, president of JLL's New York operations. “While this has been true in Midtown South for several quarters, it has now become more widespread. If this pattern continues, we can expect to see rents rise further in certain parts of Midtown.”

Rent increases at the top of the market and the removal of cheaper sublease space helped push up average asking rental rates in just about every building class and submarket in the city, JLL officials say. Overall average asking rents in New York rose to $64.26 per square foot in the first quarter of 2014, an increase of 4% from the $61.81 per square foot registered at year-end 2013. The city's class A rents grew to $70.72 per square foot in the first quarter of 2014, an increase of 2.7% from the $68.83 per square foot mark posted at the end of the fourth quarter of 2013.