Manhattan Office Leasing Hits Decade High

NEW YORK CITY—Cushman & Wakefield on Tuesday released its third quarter office report for Manhattan, which indicated that in the first nine months of this year the borough has generated 24.4 million square feet of leasing activity.

Officials with the brokerage firm say that Manhattan's office leasing market is on pace to surpass 2011 levels and therefore become the busiest market in more than a decade. Another positive for the market was that September 's 2.9 million square feet of leasing activity was the 13th consecutive month that leasing in Manhattan scored at least 2 million square feet or higher. The streak is now the longest period on record, according to C&W. Strong employment, the brokerage firm states in its report, has fueled 5.3 million square feet of positive space absorption through three quarters in Manhattan.

The technology, advertising, media and information (TAMI) sector was a key driver in the third quarter, particularly in deals of more than 100,000 square feet. There were a total of 36 transactions in excess of 100,000 square feet completed in Manhattan through the third quarter, including new leases, renewals and renewal expansions. Of those transactions, 14 were completed by the TAMI sector. An additional seven of those transactions were completed by the financial services sector. In total, 27 of the 36 transactions were new leases.

“The TAMI sector is leading the leasing velocity this year and we're seeing growth in this sector continuing, with companies taking space not only in Midtown South, but in Midtown and Downtown,” says Ron Lo Russo, president, NY Tri-State region for C&W. Commenting on the large deals negotiated in the third quarter, LoRusso says, “These large deals are mainly new leases, which shows companies willingness to move and their confidence in the market and local economy.”

The overall average asking rent in Manhattan increased 6.6% year-over-year to $66.62 per square foot. The Manhattan class-A overall asking rent increased to $73.29 per square foot from $68.40 per square foot a year ago.

The Downtown market saw the largest year-over-year drop in vacancy of the three major Manhattan submarkets. The current 9.0% vacancy rate decreased 1.8% year-over-year. The overall average asking rent increased 5.3% to $48.43 per square foot.

The Midtown Manhattan market saw the largest year-over-year increase in the average rental rate, the C&W report states. By the close of the third quarter, the average asking rent totaled $73.72 per square foot, up 7.8% year-over-year.

The Midtown South market continues to lead the nation as the tightest Central Business District with a vacancy rate of 8.5%. San Francisco is close behind with a vacancy rate of 8.6%. Midtown South has led the country with the lowest vacancy rate since the fourth quarter of 2007.