DTZ's July 2015 Manhattan Office Report

Manhattan, NY The following are some highlights and statistics from the July 2015 DTZ Manhattan Office Market Report: Manhattan posted its sixth consecutive month of positive absorption after 464,826 s/f was absorbed in July. This coincides with the strong job numbers through midyear, as office-using employment added 30,700 jobs in New York City over the past 12 months. Although availability only fell 10 basis points to 9.4 percent, this is the first month in 2015 where all three Manhattan markets contributed to the decline in available space. In addition, 13 of the 17 submarkets posted declines in the available supply. Class A asking rents increased $0.25 per square foot to $77.43; meanwhile Class B asking rents jumped $1.42 per square foot to $61.81 because of an increase in demand in the Midtown South market.   Midtown Stability Continues Midtown posted another solid month with seven of the nine submarkets having positive absorption with 256,895 s/f coming off the market, bringing Midtown’s 2015 absorption totals to positive 342,353 square feet. The availability rate decreased another 10 basis points to 9.5 percent, as the direct available supply dropped to just under 20 million s/f for the first time since December 2008. A total of 23 deals greater than 100,000 s/f have been signed through July, compared to 17 through the first seven months of 2014. This demand has caused the large blocks in Midtown to drop from 51 to 46 in the past 12 months. Class A asking rents increased $0.46 per square foot to $86.12, mainly from the Fifth/Madison asking rents increasing $0.73 per square foot to $128.20. Class B asking rents continue to rise, increasing $0.75 per square foot to $62.10. Midtown South Bounces Back Midtown South continues to be Manhattan’s hottest market with four of the five submarkets having availability rates below 7.0 percent. Availability dropped 20 basis points in July to 6.7 percent. Midtown South posted positive 152,642 s/f on the month, bringing its year to date total to positive 222,873 square feet. Demand from the TAMI sector (technology, advertising, media and information services) continues to drive the market comprising of 60 percent of Midtown South’s leasing volume. Both Class A and Class B asking rents jumped significant amounts during July, as Class A asking rents are up by $4.94 to $77.73 per square foot due to the asking rental prices at 11 Madison Avenue. Class B asking rents surpassed $70.00 per square foot for the first time in history and are up $3.13 per square foot to $71.27. Downtown Steadies Downtown continues to slowly chip away at the 1.6 million s/f of space added to the market in the first quarter. Even with 298,655 s/f of space added to the market at 200 Vesey Street, as American Express plans to vacate a portion of their space, Downtown still posted 55,289 s/f of positive absorption, causing availability to drop 10 basis points to 12.0 percent. Downtown inked its two largest relocations this year from Midtown and Midtown South during the month of July with Gucci and SandBox Studios leasing a combined 155,224 square feet. Class A asking rents increased $0.17 per square foot to $62.41. Class B asking rents remained flat in July, increasing a mere $0.07 to $44.25 per square foot, but still increased 8.1 percent over the past 12 months.   To view the full report visit: https://www.dropbox.com/s/unslkxqh96is2xm/Manhattan_Monthly_July_2015.pdf?dl=0