Cassidy Turley releases Manhattan Office Market Report: Manhattan Ends Summer on High Note

The Manhattan office market ended the summer on a positive note, with an additional 713,392 s/f of positive absorption recorded in August bringing the total to over 1.5 million s/f for the year. This pushed the availability rate down 20 basis points in August to 11.2%, the lowest it has been since 2008. A major contributor to this drop in available supply is the increase in demand for large blocks of available space. In February 2013, there were 81 blocks of available space 100,000 s/f or greater on the market (not including buildings under construction), but with an increase in leases this year, that number is down to only 69. Asking rents for both class A and class B space edged up in August, with class A increasing $0.16 per s/f to $69.44 and class B rising $0.48 to $52.67 per s/f. Midtown Picks Up Steam Midtown is in step with the overall market, as its availability rate dropped 30 basis points to 11.2% in August. This availability decline was fueled by positive absorption in eight out of the nine Midtown submarkets, which totaled positive 620,440 s/f last month. The only submarket to post negative absorption was Park Ave., where a mere negative 8,679 s/f was recorded as its availability stayed flat at 10.3%. Meanwhile, the Penn Plaza/Hudson Yards submarket had the largest decline in available space in August, as Rocket Fuel's 55,000 s/f lease at 100-126 West 33rd St. highlighted the drop in availability by 60 basis points to 12.6%. Class A asking rents were up a meager $0.08 per s/f to $77.54, despite a $1.06 per s/f drop in the Fifth/Madison submarket. This decline in the priciest submarket in the nation is more of a statitical anomaly than a trend, as high-end spaces continue to be leased and pulled from the available inventory. Class B asking rents continued a stellar climb, up $0.55 per s/f since July to $56.28. Midtown South Steadies Despite its second consecutive month of negative absorption (243,963 s/f in August) Midtown South still boasts the lowest availability rate in Manhattan, with its asking rents continuing to rise. The addition of 165,612 s/f to the market at 601 West 26th St. pushed availability up 30 basis points to 8.7%, but this could be short-lived as the Department of Homeland Security is reportedly in negotiations to renew the space. Midtown South class A asking rents remained flat in July at $67.13 per s/f, while class B asking rents rose $0.25 per s/f to $60.04. SoHo/NoHo/Village class B asking rents had the largest monthly increase to $59.04 due to 44,000 s/f coming to the market at 400 Lafayette St. with asking rents higher than the submarket average. Downtown Gains Momentum Opposite of Midtown South, Downtown posted its second consecutive month of positive absorption, as 336,906 s/f was recorded in August. This fueled the availability rate to drop 40 basis points in August to 13.6%. This decline can be mostly attributed to 130,000 s/f removed from the market by Deutsche Bank at 60 Wall St. Additionally, 41,900 s/f was leased by Pacific College at 110 William St. and Epsilon Data Management leased 34,792 s/f at 199 Water St. Overall asking rents inched up $0.09 per s/f to $47.49, as class A asking rents dipped slightly, while class B asking rents rose.