Manhattan's Leasing and Absorption Rates Remain Strong

NEW YORK CITY-Year to date, leasing and absorption of commercial space here has outpaced the last 12 months, despite a slowdown in Manhattan during October. And although rents declined a bit in Midtown, new highs were reached in the Downtown and Midtown South markets, according to a report from Insignia/ESG, the commercial real estate services firm.

Midtown: In October 1999, 1.07 million sf were leased in this sector, compared to 560,000 sf a year later, while rents in Times Square South moved beyond the $40 barrier to $40.53. In other sections of this market, asking rents continued rising, except for the Plaza District. The decrease there, from $86.86 per sf to $84.85 per sf, accounted for an overall decline in Midtown to $60.66.

Midtown South: Through October, leases in the Hudson Square/Tribeca submarket totaled 1.07 million sf compared to 240,000 sf for the same period a year ago. The infusion of several floors at 406 West 31st St. (103,000 sf) and sublease space at 1 Hudson Sq. (73,000 sf) accounted for almost three quarters of the areas negative net absorption of 270,000 sf. Average asking rents reached a new high of $47.78 per sf. vs. $32.34 per sf a year ago.

Downtown: Average asking rents rose to a new high in this part of town as well due to a dramatic decline in the available space from 9.68 million sf for the first ten months of 1999 to 4.2 million sf now. The Financial District accounted for 79% of leasing so far this year as well as 80% of its absorption. Negative net absorption at 233 Broadway (28,000 sf) and 33 Maiden Lane (88,000 sf) were responsible for the lion’s share of the 140,000 sf of negative net absorption.