NEW YORK CITY—Bolstered by significant leasing activity downtown, the New York City office market is expected to continue to post strong results for the remainder of this year, according to Colliers International.
The brokerage firm released its second quarter Manhattan office market report today, which indicates that New York City’s office availability rate continues its downward path, while office rents are mostly on the rise in the Big Apple.
The overall Manhattan availability rate continued its healthy, year-long decline, to 11.0%, down from 11.4% at the end of the first quarter and from 12.4% a year ago. The city’s overall average asking rent reached $64.46 per-square-foot, up from $63.59 per-square-foot at the end of the first quarter and from the $56.59 per-square-foot rate at the end of the second quarter of 2013.
“The Manhattan office market continues to improve, with the health of downtown a boon for the city,” says Joseph Harbert, president of the Eastern Region for Colliers International. “There has been a significant relocation of tenants from Midtown North to downtown, leaving some vacancies to fill. But, as long as we see additional employment gains in office-using sectors, we expect a strong second half of the year.”
The star of the second quarter by far was Lower Manhattan. Two of the largest second quarter leases closed in the same building, 225 Liberty St. (formerly 2 World Financial Center), with Time, Inc. taking 691,000 square feet in its relocation from 1271 Ave. of the Americas, and Bank of New York-Mellon, which leased 350,000 square feet at the property.
These two transactions alone accounted for more than half of the total second quarter leasing activity downtown, which recorded 1.99 million square feet. Although lower than the first quarter’s 2.37 million square feet and the 5.9 million square feet registered in the fourth quarter of 2013, total leasing over the last 12 months measured a staggering 11.5 million square feet, which brought the overall downtown availability rate to 13.4%, down from 17.0% a year ago.
While its availability rate is on a downward path, so are downtown’s asking rents. In the second quarter the downtown asking rent fell to $48.96 per-square-foot from the $50.25 per-square-foot posted at the end of the first quarter. The recent decline, according to Colliers, was likely due to the significant removal of space at 225 Liberty St., which was priced above most downtown Class A properties, thus skewing the overall figures.