By Sarah Trefethen
We’re half way through 2013 and everything’s looking up in Manhattan real estate: rents, leasing volume, sales volume and … vacancy rates.
The end of the second quarter sees Manhattan-wide Class A office vacancy at 11.6 percent, according to data compiled by Cushman & Wakefield.
That’s up from 9.1 percent at the end of Q1 and a 1.6 percent increase over this time last year.
But the spike in empty offices is little surprise, given the more than 1.5 million square feet of Class A inventory added to the books in the past three months.
And speakers at C&W’s quarterly press conference said they were confident that both tenants and investors are ready to welcome the new product with open arms.
High-end leasing has been on fire this year, with the average Class A asking rent in Midtown at $73.63, the highest it’s been since 2009.
Midtown has seen a total of 36 deals signed at over $100 psf so far this year, which is already more than the 35 such deals signed in all of 2012.
Boutique financial firms have been driving the ultra-high end Midtown leasing surge, according to Melissa Bazar, a C&W executive director.
In Midtown South, the addition of Edward Minskoff’s 51 Astor place to the market has driven the Class A vacancy rate to 8.5 percent and the average asking rent to $75.63 psf – a record for the neighborhood, and also the first time that Midtown South’s asking rent has surpassed its northern neighbor, Jamie Katcher, C&W senior director, told reporters.
If you remove 55 Astor from the calculations, the average asking rent across all office classes drops from $59.46 to $55.50, he said, which is still an all-time high.
Downtown, the story is similar. Class A vacancy is at 13.9 percent, according to the C&W data.
But if you remove the neighborhood’s seven largest blocks of space — including the 2.9 million square feet available at Brookfield Place, that rate drops to 8.3 percent, according to Frank Cento, C&W executive director.
On the investment sales front, Helen Hwang heralded the “return of the mega deal.”
While the number of transactions so far this year are at just half of 2012 total, the average sales price is $178 million compared to just $86 million last year.
Investment sales activity this year has focused on core assets, Hwang said, citing investor demand driven by abundant capital, historically low interest rates and a flight to quality.
Cushman and Wakefield knows of 10 transactions currently under contract for over $400 million, she said.