Fuelled by a flurry of large transactions, the fourth quarter’s leasing activity surged to 13.5 million square feet – closing the year at 39.3 msf. The overall availability rate inched downward and rents held steady for the quarter.
With decreases in both Class A and Class B rates, Manhattan’s overall availability rate (11.7%) declined from for the quarter and from a year ago. Midtown and Downtown each posted declines in their overall availability rates for the quarter. However, Midtown South‘s overall availability rate remained relatively unchanged.
Manhattan’s overall rent rose by 7.2% from a year ago. Rents continued to post strong growth over the last twelve months in most districts in response to strong leasing activity. Class A rents increased at a healthy pace of 5.5%. Class B rents rose by 17.9% from a year ago, driven primarily by the rapid rental rate increases in Midtown South, as the technology and media firms continue to gravitate to this submarket.
Leasing activity was exceedingly strong for the quarter, far outpacing the level of last quarter and a year ago. The plethora of large transactions during the quarter was the source of the volume. While Midtown accounted for 48% of the tenant volume for the quarter, Downtown’s share, at 39%, was unusually strong – with the Financial West district (3.9 msf) having the largest amount of activity for the quarter. Financial Services inked 33% of the quarter’s new leases, followed by technology/media firms with 14% of the activity.
Net absorption was positive for the quarter at 2.2 million square feet. Midtown and Downtown each posted positive absorption for the period. However, Midtown South recorded a negative rate of absorption.
With the local and national economy expected to gain momentum over the near term, demand is likely to continue to grow, placing continued upward pressure on rental rates, especially as landlords reduce the value of concession packages.
Source : DTZ (Groupe UGL)