The Manhattan office market chugged along in the final month of a busy summer, buoyed by a booming tech sector that is increasingly in expansion mode in Midtown South and beyond.
Manhattan Class A office space went for an average ask of $75.54-per-square-foot last month, up 8.8 percent from $69.42 in August 2013, according to commercial brokerage Cassidy Turley’s latest Manhattan Office Market Report. The borough had an absorption of 1.2 million square feet, according to the report, and overall availability tumbled below 35 square feet for the first time since December 2008.
“It was a surprisingly strong summer,” said Richard Persichetti, Cassidy Turley’s vice president of research, marketing and consulting. “The needle actually moved when it comes to available space. A lot of times the summer months are static, but the market didn’t lose momentum this year.”
Availability in Midtown reached a 75-month low, falling 30 basis points in August down to 9.7 percent. The area posted the most positive absorption in August with another 580,517 square feet recorded, driven by R/GA’s 173,000-square-foot lease at 450 West 33rd Street and a trio of subleases at 1166 Avenue of the Americas totaling 120,720 square feet.
But despite having Midtown’s lowest availability rates, submarkets the East Side/UN, Fashion District and Midtown West/Columbus Circle posted negative absorption, while Park Avenue, Penn Plaza/Hudson Yards and Times Square posted supply declines despite higher-than-average availability, the report showed. Class A asking rents in Midtown rose 7.2 percent to $83.07 per square foot from $77.49 during the same period last year.
Availability tightened in Midtown South as well, falling 50 basis points to 7.8 percent in the area’s fourth-straight month of decline. Class A rents in the neighborhood rose 6.4 percent to $71.55 from $67.19 in August 2013.
“We’re still seeing the tech firms in an expansion mode throughout the city, and not just Midtown South anymore,” Persichetti said. “Smaller ones are looking at Brooklyn and LIC, and some also going Downtown, which is helping that market.”
Downtown availability fell for the seventh month in a row, tumbling 30 basis points to 10 percent. When One World Trade Center’s 1.2 million square feet will hit the market in the fourth quarter, however. Class A asking rents in the neighborhood, while still lower than their Midtown and Midtown South counterparts, ticked up 5.3 percent to $55.24 per square foot from $52.43 per square foot during the same period last year.