Manhattan's Office Market Showing Improvement

NEW YORK CITY—After a slow start that saw the Manhattan office market post a negative 2.3 million square feet of absorption in January, the borough's office sector has rebounded with three straight months of positive absorption, according to a report released today by brokerage firm DTZ.

In its latest office market report authored by Richard Persichetti, vice president, research, marketing and consulting, and research manager Lauren Hale, DTZ states that there was 197,899 square feet of positive absorption in the month of April, fueled by leasing activity in Midtown and Downtown. The three months of positive leasing have brought the year-to-date negative absorption level to 1.5 million square feet. So far this year there have been 19 lease deals of more than 100,000 square feet in Manhattan.

The overall Manhattan availability rate fell 10 basis points to 9.7%, while the asking rent in Manhattan is $70.10 per-square-foot. Class A office rents borough-wide rose $0.67-per-square-foot to $77.18 per-square-foot, the highest price increase for prime office space so far this year, DTZ reports.

Other takeaways from the DTZ market report

• Only five out of nine submarkets in Midtown posted positive absorption in April, but it was enough to drop the availability rate 10 basis points to 9.8%;

• Midtown leasing activity has been strong, as 16 of the 19 big leases signed this year were in that market;

• Of the 16 Midtown leases greater than 100,000 square feet, five were lease renewals;

• Class A asking rents in Midtown continue to rise, up $0.90 per-square-foot to $85.87;

• The Park Avenue submarket reached its lowest level since 2011 at 8.7%, down 260 basis points since its recent market high of 11.3% in April 2014;

• Park Avenue Class A asking rents now stand at $99.08 per square foot;

• Midtown South availability remained at 6.6% in April, despite 10,613 square feet of negative absorption;

• Strong demand in the Hudson Square/TriBeCa submarket led to a 4.8% availability rate, the second lowest in Manhattan;

• Downtown's availability rate at the end of April was 2.4%, down 20 basis points since March, but equals the level from January;

• After the addition of almost 1.5 million square feet of space to start 2015, minimal leasing activity this year has stalled Downtown's recovery

• Only two leases greater than 50,000 square feet were signed in April, which keeps the year-to-date leasing activity at below 800,000 square feet;

• DTZ in its report states that Downtown activity is likely to pick up over the next few months as it has 21 value-options for tenants looking for more than 100,000 square feet of space;

• Both Class A and Class B asking rents in Downtown Manhattan were up $0.14 per-square-foot to $61.75 and $0.11 to $44.13 per-square-foot, respectively in April.