Highlights from Cassidy Turley's Second Quarter Manhattan Office Market Report

According to Cassidy Turley's Second Quarter Manhattan Office Market Report, New York City's economy continues to grow, rising to 4.5 million in May 2014, up 1.9% from May 2013. Office-employment numbers have risen by 19,600 in the past year through May; most of the growth comes from the professional sector which added 17,400 jobs in the past 12 months. The growth of the local economy is on par with the state of the real estate market, which posted a stellar second quarter. Manhattan Highlights *Fifth consecutive quarter of positive absorption, despite Midtown South being in the red for this quarter. *1.45 million s/f of positive absorption recorded in the second quarter. * Brings mid-year total to just less than 3 million square feet. *Class A has been in high demand this year. * Class A absorption surpassed overall absorption at 3.1 million square feet. *Strong tenant demand for Downtown space and improving market fundamentals within Midtown fueled a decline in the available supply. * Dropping the overall Manhattan availability rate by 30 basis points to 10.1 percent, the lowest rate in 23 quarters. *Solid leasing activity resulted in just over 17 million s/f being transacted. * 11 leases greater than 100,000 s/f were signed in this quarter alone. The total number of large leases signed is 27 by mid-year, on pace with the 58 completed in 2013 *Supply and demand: Demand for large blocks of space remains high, while supply for these spaces continue to disappear. *Class A asking rents are up $1.07 per s/f to $74.86 in the second quarter. *Class B asking rents jumped $2.25 to $57.24 per s/f after dropping in the first quarter. Neighborhood Highlights Midtown *Following a flat first quarter, the Midtown office market had a strong showing in the second quarter with 1.2 million s/f of positive absorption. * Leading to a 40-basis-point-drop in availability to 10.4 percent. *Available sublease space continues to decline, and at 4.5 million s/f it reached its lowest level since first quarter 2008. *Three leases greater than 350,000 s/f were signed in the second quarter, bringing the year-to-date total to five - the total for all of 2013. * These large leases helped leasing activity reach over 9 million s/f thus far for the year. *Class A asking rents crept up $0.13 per s/f to $82.24 in the second quarter. *Class B asking rents increased $0.83 to $59.08 per s/f in the second quarter. *Despite increasing 38 percent during the current rising cycle, overall average asking rents are still 15 percent off the historical highs. Midtown South *Midtown South's availability rate increased 90 basis points in the second quarter to 8.4 percent. * The bulk of this increase was fueled by seven buildings adding more than 95,000 s/f each to the market. *The increasing availability rate creates opportunities for tenants in the tightest of the three major markets. *The rise in available supply did not thwart rental growth as Class A and B asking rents continued to soar. *Class A asking rents are up $2.51 per s/f this quarter to $75.01. *Class B asking rents jumped $3.52 to $64.40 per square foot. Downtown: *Despite the recent increase in demand Downtown, overall average asking rents still remain $24.69 per s/f higher in Midtown, and $13.79 per s/f higher in Midtown South. *Tenant demand for space Downtown remains high as the availability rate dropped 120 basis points in the second quarter to 10.9 percent. *Almost 1.1 million s/f of positive absorption was recorded in the second quarter. * Fueled mostly by two tenants committing to significant spaces at Brookfield Place. Time Inc. plans to consolidate its multiple Midtown locations into 691,382 s/f at 225 Liberty Street. Bank of New York Mellon will join Time Inc. in the same building, opted to remain Downtown and leased 358,278 s/f. *Class A asking rents dipped slightly in the second quarter, down $0.14 per s/f to $55.22. Class B space remains a value-option for tenants. At $40.84, Class B asking rents are up $2.66 per s/f since the first quarter.