Manhattan Office Availability Rate Falls to 9.4%

NEW YORK CITY—Commercial brokerage firm Cassidy Turley reports that the overall Manhattan office availability rate fell 30 basis points in August to 9.4%, fueled by positive space absorption and a drop in available supply to the lowest point since December 2008.

The drop in the overall availability rate was attributable to 1.2 million square feet of positive space absorption during August as well as available supply falling to 35 million square feet. The brokerage firm in its report, authored by Richard Persichetti, vice president, director of research, marketing and consulting, and Lauren Hale, senior research analyst, notes that year-to-date positive absorption is approaching 6 million square feet.

Another sign of a still robust market in Manhattan, Class A asking rents rose for the 13th consecutive month, up $0.29-per-square-foot in August to $75.54-per-square-foot. Class B asking rents continue to reach new record highs, up $0.11-per-square-foot last month to $57.58-per-square-foot, Cassidy Turley reports.

Other key takeaways from the report include Midtown's availability rate falling another 30 basis points in August, down to 9.7%—the lowest level in 75 months. Midtown posted the most positive absorption of the Manhattan neighborhoods in August, with another 580,517 square feet recorded. This was fueled mostly by R/GA's 173,000-square-foot lease at 450 West 33rd St. and three subleases at 1166 Ave. of the Americas totaling 120,720 square feet, the brokerage firm reports.

Despite the East Side/UN, Fashion District and Midtown West/Columbus Circle submarkets having the lowest availability rates in Midtown, all three submarkets posted negative absorption in August. Meanwhile, submarkets with availability substantially higher than the Midtown average, Park Avenue, Penn Plaza/Hudson Yards and Times Square, all posted significant declines in the available supply. Midtown Class A asking rents continued to rise, up $0.37 to $83.07-per-square-foot in August, and $3.04-per-square-foot since the start of the year. Class B asking rents edged up $0.10 per square foot to $59.54-per-square-foot.

The overall availability rate for Midtown South dropped 50 basis points to 7.8% in August. This marks the fourth consecutive month of decline in the available supply after availability peaked at 8.9% in April. Demand for space has also pushed the Class A availability to the lowest level since September 2008.

Since January of this year, Downtown is the only market to have availability drop for seven months in a row. In August, the availability rate dropped another 30 basis points to 10.0%, a 330 basis-point-decline since the beginning of this year, Cassidy Turley notes. Although market trends have been steadily improving Downtown, the delivery of One World Trade Center in the fourth quarter will bring another 1.2 million square feet of available space to the market. This will minimally impact the statistics, however the trend of tenants seeking discounted rents will keep demand high in Lower Manhattan, the brokerage firm predicts.