Several large leases were signed and several large blocks of space were added to the Manhattan office market in the first quarter of 2018, and the average asking rates stayed about the same.
Companies with big footprints, such as JPMorgan Chase and Google, made big announcements this year, with the former planning to tear down and redevelop its headquarters at 270 Park Avenue, and the latter closing on its $2.4 billion acquisition of Chelsea Market at 75 Ninth Avenue.
According to a JLL report, office occupiers have been busy repositioning themselves in order to attract high-quality talent. Often that tactic involves consolidating their workforce staff into single buildings or campuses.
Manhattan overall asking rents dipped for only the third time in the last 29 quarters, according to the report, declining slightly by $0.43 to $72.48 p/s/f. The report attributed the dip to the Class B office segment, which decreased by $0.91 to $56.83 p/s/f in the first quarter of 2018.
Vacancy rates also decreased in the first quarter in Manhattan, dipping from 8.8 percent at the end of 2017 to 8.5 percent in the first quarter. The decrease was led by Midtown South, which posted a quarter-over-quarter decrease of 80 percentage points to 5.9 percent.
According to a Q1 office market report from Transwestern, the availability rate in the Downtown submarket increased from 13.8 percent to 14.3 percent from the last quarter, while in Midtown the availability rate increased slightly from 10.6 to 10.9 percent, and in Midtown South availability increased from 9.4 to 9.8 percent.
Transwestern also found that average asking rents in Manhattan stayed steady, with Midtown average asking rents increasing slightly from $76.65 to $79.08 since the last quarter, Midtown South increased from $71.70 to $76.36, and a very slight increase in the Downtown market from $64.78 to $64.80.
“What’s notable about this quarter is that while several large blocks of space were added to the market, average asking lease rates have remained virtually unchanged,” said Danny Mangru, research manager at Transwestern.
“We’ve found that a wide range of quality, plus a mix of old and new product has suppressed significant rent movement. Despite a slowdown in leasing to start 2018, there were several large leases, both new and renewals, which indicates the steady demand from 100,000 s/f users.”