At its Q4 review breakfast, CBRE discussed findings that placed Manhattan’s overall office leasing activity on a 20 percent rise from 2013’s marks.
Over the course of 2014 the borough saw 29.85M sf of office space leased as opposed to the 25M that was claimed the year prior.
The climbing numbers are a product of growth in all three Manhattan markets, but Downtown notched an all-time average high in asking rents at $51.97 per sf.
“Downtown achieved historic activity and all-time high average asking rents in 2014 and we will continue to see that momentum in 2015, which I believe will be a record year,” said Mary Ann Tighe, CEO, New York tri-state region.
Downtown’s Q4 contributed nearly 1.7M sf of leasing to the impressive 2014 total of 6.84M.
Midtown South saw 1.05M sf of leasing during last year’s closing quarter, which was a bit of a dip for the sector as the five year quarterly average sits at 1.25M. It was also a 40 percent drop from the Q3’s activity. On the whole, Midtown South made strides in 2014 and clocked in at 6.22 M sf leased, which is nearly 50 percent higher than the 4.19M sf mark of 2013.
Asking rents slid in the final quarter to $66.38 per sf but still finished above 2013’s finale.
Midtown raked in 4.15M sf of leasing during last year’s finale, which was a 3 percent increase compared to Q3. In total, the area saw 16.8 M sf of leasing activity throughout the year which was a 12 percent improvement over the 15.05 sf of activity during 2013. Asking rents rose modestly and finished just under $75 per sf.
Tighe attributed the positive stats to city-wide renovations and refurbishments.
“This was a year of building repositioning,” said Tighe while discussing the active market during the breakfast. “Let’s be honest, landlords typically don’t invest in the building if their doing renewals.”
“If you want to attract tenants, you actually have to invest.”
Peter Turchin, vice chairman, echoed that sentiment and said that the undertaking of moving a company was only worth a client’s focus if the new space was a substantial improvement.
“You want an environment where people have light and air,” said Tighe stressing that there’s more to establishing a new home than simply squeezing in as many workers as possible into a location.
Tighe discussed her clients rising awareness regarding the practicality and efficiency of an entire building as it relates to restroom facilities, elevators, etc.
“(2014 was) the year of the large relocation,” said Turchin, “as we had 33 relocations of more than 100,000 sf last year, compared to 17 in 2013.” Those moves accounted for 7.5M sf of space as compared to 2013’s 3.4M.
Tighe also said that the concept of working from home “depressed the market” when it first became a mainstream option in recent years. In the current workplace climate, the practice of signing in remotely no longer puts a significant damper on leasing.
“People don’t want to jettison entirely nor does management want to jettison the idea of people having dedicated space to them,” Tighe said, adding that tenants are now more interested in creating an office climate that will encourage employees to work from site “as often as possible.”
Both Tighe and Turchin expressed optimism for 2015, and expect the leasing activity to continue to increase.