A glut of newly constructed office space caused Manhattan’s availability rate to rise in the first half of the year, despite moderate leasing activity that exceeded the level at the same time last year, a report released this morning by commercial services firm Cushman & Wakefield shows.
The volume of leasing reached 12.4 million square feet overall in the first six months of the year, an 11.1 percent rise over the same period last year. But over the last three months, a handful of large blocks of office space hit the market, pushing up the availability rate in the second quarter to 10.4 percent, an increase of 1.3 points over the previous quarter, the firm reported.
“We do have, as you can see, a dramatic uptick in vacancy rates, due to the new product coming online in Midtown and Midtown South. And Downtown also increased due to new big blocks being put on the market,” said Ron Lo Russo, Cushman’s president of the tri-state region.
He was speaking at Cushman’s quarterly breakfast briefing held this morning in Midtown.
Moreover, with the addition of the 400,000-square-foot 51 Astor Place to the Midtown South market, the average Class A asking rent surged in Midtown South, and for the first time ever surpassed Class A asking rents in Midtown.
Midtown South Class A asking rents hit $75.63 per square foot, besting the Midtown Class A asking rent of $73.63 per foot, the Cushman figures reveal. Jamie Katcher, a Cushman senior director, cautioned that the Midtown South Class A market was much smaller than the Midtown Class A market, so the addition of the building pushed asking rents up substantially.