CBRE Group, Inc. issues June 2014 Manhattan Office Marketview Report

The Manhattan office market recorded 3.58 million s/f of leasing activity during May, 72% higher than the five-year monthly average of 2.08 million s/f year-to-date leasing was 28% ahead of the 2013 pace. Headlines in May included Time, Inc.'s 670,000 s/f Downtown relocation and Sony's 506,000 s/f deal at 11 Madison Ave, according to CBRE Group, Inc.'s 2014 June Marketview Report. A net total of 1.49 million s/f of absorption was measured during the month, although the year-to-date total was negative 74,000 s/f The availability rate in Manhattan improved to 11.7% during May, compared to 12.1% in April and 12.7% one year ago. The average asking rent finished the month at $65.51 per s/f, up 7% from the $61.20 per s/f average reported one year ago. Among the report's highlights: Midtown - May leasing totaled 1.6 million s/f, 24% higher than the five-year monthly average of 1.29 million s/f The year-to-date leasing total of 7.34 million s/f through May was 13% higher than the 6.47 million s/f of activity recorded during the same period in 2013. May was the fourth consecutive month with positive absorption, at 345,000 s/f, which brought the year-to-date net total into positive territory for the first time in 2014, at 201,000 s/f Midtown was the only Manhattan market to post positive absorption through the first five months of the year. The availability rate in Midtown was 11.6% at the end of May, lower than the 11.8% rate at the end of April and the 12.6% rate reported one year ago. The average asking rent slipped slightly to $74.39 per s/f, from $74.56 per s/f in April, although it was 6% higher than the $69.96 per s/f average reported one year ago. Midtown South - Led by Sony's 506,000s/f deal at 11 Madison Ave., leasing activity in Midtown South hit 1.01 million s/f during May; the highest monthly total for the market since March 2001's 1.52 million s/f and nearly triple the five-year monthly average of 392,000 s/f The month's high volume of activity brought the already strong year-to-date leasing total to 2.95 million s/f, marking the strongest year-to-date total through May for any year on record. Absorption totaled 295,000 s/f during the month, although the year-to-date net total was negative 187,000 s/f The availability rate closed May at 10.3%, an improvement on the 10.7% rate in April, while the sublease rate improved to 2% from 2.1%. The average asking rent in the market rose to $66.25 per s/f during May, up from $65.45 per s/f in April and a 4% increase over the $63.59 per s/f average reported one year ago. Downtown - Leasing activity during May totaled 972,000 s/f, more than double the five-year monthly average of 403,000 s/f Year-to-date leasing was 38% ahead of the 2013 pace and the strongest since 2000. Time, Inc.'s 670,000s/f deal at 225 Liberty St. was the largest lease signed in Manhattan during the month and continued the trend of non-financial tenants relocating to Lower Manhattan. Net absorption reached 851,000 s/f during May, the largest monthly total for Downtown in nearly three years, as the availability rate dropped sharply to 12.9% from 13.9%. All three Downtown submarkets posted average asking rent increases during the month. The overall average finished at $49.36 per s/f, up slightly from $49.09 per s/f in April. Investment Sales: * NYU Hospital Center purchased the leasehold interest in 333 East 38th St. from SL Green for $145 million ($344 per s/f). * KLM Construction purchased 920 Broadway from a joint venture between Carlyle Group and ClearRock Properties for $118 million ($1,092 per s/f). * RXR purchased 61 Broadway from Broad Street Development and Heyman Properties for $330 million ($419 per s/f). * A joint venture between Savanna and KBS Strategic Opportunity REIT purchased 110 William St. from the joint venture of Swig Burris Equities, Silverpeak RE Partners and Dubai Holding for $262 million ($282 per s/f). * Lightstone Group acquired 130 William St. from Triangle Assets for $60 million ($463 per s/f).