By Sarah Trefethen
Manhattan’s office tenants paid top dollar for lease renewals in 2012, according to analysts at CBRE.
All 10 of last year’s largest lease deals were renewals, Peter Turchin, executive vice president, told reporters at the brokerage’s quarterly Manhattan office market press conference Tuesday.
In contrast, by number of deals only 58 percent of the top ten deals of 2007-2011 were renewals, he said.
“I can’t recall another year when we haven’t had a tenant in a top ten deal be a relocation,” Turchin said.
Average starting rent for the top ten relocation deals was $97.29, he said, compared to $127.80 for renewals — a difference of 32 percent.
“Renewal tenants are paying a premium versus relocating,” he said. The analysis of rents, Turchin said, did not include the cost of relocating and other expenses.
The addresses of the top ten renewal and relocation deals are similar, with the midtown portions of Park and Madison Avenues featuring strongly on both lists.
Three of the ten largest relocation deals were in Boston properties’ 399 Park Avenue.
One neighborhood were renewals did not dominate the 2012 leasing market was Midtown South, which saw 1.1 million s/f of renewals and five million s/f of new leases.
With an availability rate of 8.6 percent in December, that submarket remains the tightest in the country, according to CBRE, and average asking rents for Class A space in the district increased almost 20 percent between 2011 and 2012, ending out the year at an average of $55.14 psf in December.
Manhattan-wide, average asking rents also increased, from $53.11 psf in 2011 to $58.84 psf in 2012.
Overall Manhattan office leasing activity was down 20 percent compared to 2011, with 22.3 million s/f leased, and the availability rate that increased to 11.9 percent from 10.7 percent in 2011.
The large blocks of office space coming online downtown this year could be concern for the leasing market, but Adam Foster, senior vice president, seemed confident tenants will be found for buildings such as the World Financial Center and 4 World Trade Center.
“From our inability to keep our shoes clean, I think we’ll see a lot of that space leased up by the end of the year,” he said.