Despite concerns that headline-grabbing office deals are masking a soft market, Manhattan’s major leasing indicators show the market is holding steady at the halfway point of the year.
New leasing and renewal totals showed only a slight, nominal dip year-over-year to 17.79 million square feet, according to Colliers International. And absorption is looking much better than it did at the same point last year as it’s reversed course and is now trending positive.
“People thought what was making the market look healthy was these big deals,” said Craig Caggiano, an executive director for Colliers in the tri-state region. The mid-range market, he added, is in line with where it was last year and “well ahead” of where it was two years ago.
Brokers have expressed concerns that beyond some large, flashy deals, leasing activity is softer than landlords would like, especially in the range of 30,000 square feet to 100,000 square feet.
But according to Colliers, leasing activity in this segment of the market totaled 5.29 million square feet in the first half of the year, roughly on par with the 5.31 million square feet leased in the first half of last year and about 9 percent above the 4.85 million square feet leased in the first half of 2015.
Capital One, for instance, signed a deal in May for 52,000 square feet at 11 West 19th Street. HomeAdvisor.com – the home improvement website owned by media mogul Barry Diller’s IAC – leased 43,000 square feet at 330 West 34th Street, and newspaper publisher Gannett inked a 50,000-square-foot deal for its media-sales offices at 1633 Broadway, just to name a few.
And at this point last year the balance of supply and demand was tipped in the tenants’ favor, as absorption stood at negative 1.71 million square feet. By the end of June this year, however, absorption was positive at 490,000 square feet.
Manhattan’s average asking rent rose slightly year-over-year to $73.07, with the Downtown submarket showing continued and significant pricing growth. The Lower Manhattan market saw asking rents grow year-over-year during the first half by almost 9 percent to $63.46 per square foot, according to Colliers. A report by CBRE shows asking rents in Lower Manhattan hit an all-time high in June, surpassing a record set earlier in the year in January.
Midtown asking rents dropped 2 percent to $83.09 per square foot, though some of that could be attributed to higher-priced space coming off the market. Midtown South held relatively steady at $66.32 per square foot.
(To view 2017’s office leasing Deal Sheet, click here)