Standoff Exists Between Tenants and Landlords in NYC

NEW YORK CITY—Leasing volume in New York City fell for the fourth straight quarter, reaching just 7.4 million square feet in the fourth quarter of 2014, according to a report released today by brokerage firm Savills Studley.

Overall leasing has slowed in Manhattan, Savills Studley states. With strong activity along the Avenue of the Americas and in the Penn Plaza/Garment District, leasing rose to 4.8 million square feet in Midtown. That heady activity was offset by deal volume in Midtown South that fell by more than 25% and Class B and C leasing volume Downtown, which posted its weakest quarter since mid-year 2009 with just below 500,000 square feet in transactions.

“Heading into 2015, tenants and landlords are both showing less urgency to lease space,” says Stephen Berliner, executive vice president at Savills Studley.

Savills Studley senior managing director John Johnson adds, “A bit of a standoff is unfolding as tenants see fewer value-plays warranting a relocation and more landlords are holding the line on face rents.”

Manhattan's Class A availability rate rose slightly from 12.6% to 12.7%, as a 0.6 percentage point quarter-on-quarter increase in Midtown (to 12.2%) offset a decrease of 1.5 percentage point to 16.0% Downtown, the report states.

Class A asking rents were also relatively flat during the fourth quarter of last year. Midtown's average Class A asking rent fell by 0.7% to $86.16-per-square-foot. Downtown's Class A asking rent rose by 1.5% to $62.68-per-square-foot. Class B and C rents across Manhattan continue to rise more markedly, averaging $58.18-per-square-foot at year's end, a 15.5% year-on-year increase.