By Konrad Putzier
Amid strong leasing in the second quarter, Manhattan’s office availability has fallen to its lowest level since 2008, reports by commercial brokerages Cassidy Turley and Cushman & Wakefield show.
Manhattan’s availability rate fell to 10.1 percent, according to Cassidy Turley’s Second Quarter Manhattan Office Report – down from 10.4 percent in the first quarter.
The decline was accompanied by one of the largest total leasing volumes in recent decades.
Cassidy Turley’s report puts total leasing in the first two quarters at just over 17 million s/f, while Cushman & Wakefield’s mid-year report claims 16.7 million s/f were leased.
This volume is just shy of the 17.4 million s/f recorded in the first half of 2011 — the highest since 2000 – C&W’s report noted.
Downtown’s office market had a particularly strong showing with a decline in availability of 1.2 percentage points to 10.0 percent.
Midtown South’s vacancy rates nudged up slightly to 8.2 percent from 7.9 percent, driven by five buildings hitting the market.
The overall Manhattan average asking rent increased by nearly five percent year-over-year to $64.82 per s/f, according to C&W.
“Despite sluggish job growth, the Manhattan market is performing well,” said Don Noland, managing director of research at C&W. “There’s a healthy pipeline in several core leasing industries.”
But while this quarter’s results are encouraging, there is still great uncertainty over where the vacancy rate is heading over the coming year, argued Peter Hennessy, Cassidy Turley’s Tri-state president.
“The picture looks good right now, but there are some lingering clouds,” he said.
Uncertainty stems in large part from the soon-to-be available office space downtown that may enter the statistics in 2015. One World Trade Center, One Chase Manhattan Plaza and 101 Barclay Street could add well over three million s/f of empty space to the market, if no major leases are signed before they officially become available, Hennessy explained.
“Is leasing (at these towers) going to happen this fall? I hope so. We just don’t know if it’s going to be substantial,” Hennessy said. For Manhattan as a whole, Hennessy pointed to the continued weakness of the financial services sector is a drag on leasing.
Still, he expects the vacancy rate to fall to “the low nines” over the coming year.