X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-Strong June leasing activity in Manhattan’s submarkets was followed by “a very robust” July, driven in large measure by “more palatable” asking rents, CB Richard Ellis’ Pamela Murphy said in a conference call Monday. The back-to-back Midtown tallies of one million square feet per month marked the first such occurrence since April and May of 2008, and suggested that tenants think the market bottom is close enough to make leasing decisions, CBRE says.

CBRE’s July monthly snapshot, released Monday, reported that overall activity for the month was 2.22 million square feet, compared to 1.65 million square feet a year ago. Midtown’s July tally of 1.58 million square feet marked the first time leasing there has exceeded the five-year monthly average of 1.3 million square feet since January ’08, according to CBRE.

Midtown and Downtown saw positive absorption for the first time in several months, and while Midtown South leasing did not exceed the five-year average, it came closer to par than it has thus far this year. Overall absorption improved from negative 460,000 square feet to positive 310,000 square feet, compared to the July ’08 total of negative 1.05 million square feet.

“As we predicted at our second quarter Manhattan market news conference, Midtown in July showed a significant jump in leasing activity, including relocation transactions such as the Orrick move to 51 W. 52nd St., a division of the UN moving to 730 Third Ave. and the FDIC going into the Empire State Building,” CBRE EVP Peter Turchin says in a release. “It is becoming increasingly clear that if we are not at a bottom in rents, then a number of tenants in the market are sensing that we are close enough to the bottom for them to make a decision on their expiring leases and perhaps to relocate.”

Added Murphy, SVP and head of New York tri-state research and technology, in Monday’s conference call, “Pricing is getting a lot more palatable and tenants are therefore more willing to engage the market.” Average asking rents across Manhattan dipped from $53.35 per square foot in June to $52.43 per square foot last month. Midtown’s rate of decline in asking rents has diminished each month since February, according to CBRE.

During the conference call, Turchin noted that two of the month’s notable leasing transactions occurred in the burgeoning life sciences sector: Genzyme’s 98,000-square-foot renewal at 521-33 W. 57th St. and ImClone signing a 91,000-square-foot lease to become the first tenant at the East River Science Park. Whether these deals will be followed by similar ones anytime soon is an open question, but Turchin said the sector is being targeted as a growth area.

Studley’s second-quarter report, also released Monday, provided more evidence of renewed activity while also sounding a note of caution. The report noted that Manhattan leasing activity rose from a 20-year low of 3.2 million square feet in the first quarter of 2009 to 4.5 million square feet in Q2, although still 38% below the historical quarterly average of 7.2 million square feet.

Sublet space, which went from 6.3 million square feet in mid-January ’08 to 17.8 million square feet in June of this year, hit a plateau in May and June. Meanwhile, the rate of new sublet space coming into the market slowed from nearly 900,000 per month at its peak to about 525,000 square feet in May and June. However, “tenants still have a deep pool of quality sublet space from which to choose,” according to a release.

“These are all good signs,” says Steven Coutts, Studley’s SVP for national research services, in a release. “But lest we put the cart before the horse, it’s essential to monitor what happens over the next several months to determine if the second quarter of 2009 marked a turning point in the recession or if it was simply a pause in what is yet to come. Earnings and employment numbers over the next several months will remain critical benchmarks.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.