Blizzard of Space Hits NYC Office Market

NEW YORK CITY—While the recent predictions of a major snowstorm hitting New York City failed to materialize, brokerage firm DTZ reports that a blizzard of space slammed the market in January, causing Manhattan's vacancy rate to climb 60 basis points to 9.9%.

DTZ says 11 buildings that each added at least 45,000 square feet of space came on the market in January fueling a negative 1.6-million square feet of absorption. Rents overall in the borough dropped almost $1 a square foot ($.94) to $76.31-per-square-foot.

Midtown's availability increased 30 basis points in January to an even 10%, due mostly to the media and publishing industry returning space to the market, the brokerage firm says. Midtown also suffered negative absorption of 937,684 square feet in January.

A highlight for Midtown last month was the first $2-billion transaction since 2008 with Ivanhoe Cambridge's and Callahan Capital Properties' acquisition of 1095 Avenue of the Americas from Blackstone Group LP for $2.2 billion, or $1,833 per square foot

Class A asking rents in Midtown increased by $0.23-per-square-foot to $85.05-per-square-foot. Class B asking rents dropped $0.33-per-square-foot to $61.02.

The Midtown South market was by far the hottest in New York City last month, enjoying a 10-basis-point-drop in availability to a 15-year low of 6.9%.

Four out of five submarkets in Midtown South had drops in availability as the market posted its fourth consecutive month of positive absorption at 58,583 square feet, DTZ states.

Midtown South continues to see the conversion of some office properties to residential use. The most recent of these conversions was 212 Fifth Ave.—the largest property of the former F.M. Ring portfolio, which sold for $260 million, or $1,163 per square foot

Class A asking rents increased $0.58-per-square-foot to $76.13, while Class B rents rose $0.33-per-square-foot to $67.61-per-square-foot in Midtown South.

The Downtown availability rate rose 200 basis points in January to 12.4%, as several large blocks of space came on the market. Contributing to the increase in supply was the 984,116 square feet added to the market at 28 Liberty St. (formerly known as 1 Chase Manhattan Plaza), followed by 457,109 square feet at 195 Broadway.

Downtown posted negative 733,857 square feet of absorption in January. Downtown Class A asking rents were at an all-time high, jumping $0.34-per-square-foot to $60.29, while Class B rents increased 15.1% over the past year to $43.43-per-square foot.