Available supply grows; asking rents back on the rise.

In February, leasing activity decreased from the previous month, according to the March Insignia/ESG Office Market Review. At the same time, newly available sublease space in each market caused overall instances of negative net absorption for the month. Despite this, asking prices held firm and in some areas of Downtown headed north once again.

Available supply was up in all markets, but only marginally; Midtown's availability rate rose 0.1 percentage points to 4.6% in February, Downtown increased from 4.7% to 4.9%, and Midtown South's availability went from 7.0% to 7.3% during the month.

Downtown's average asking rent was up $0.23 to $44.92 per SF, but in Midtown and Midtown South average asking prices were steady.

Space returning to the market slowed somewhat in February, but still produced negative net absorption throughout Manhattan.

Joseph R. Harbert, COO of Insignia/ESG's New York Region, said "After so many months of pent-up demand and very little supply, it's a relief for tenants to have more options to choose from. Overall, the fundamentals of the market remain much the same -- supply is low and pricing is steady. We do see some good opportunities for tenants in the sublet markets right now, and concessions have eased up slightly."

Midtown:

Leasing activity in February dropped 21% from the previous month to 780,000 SF.

Net absorption totaled negative 300,000 SF for the month, a vast improvement from the 1.10 million SF returned to the market in January. New space offerings that came online last month included a 69,900 SF sublease from Sakura Bank at 101 Park Avenue and an 85,000 SF block of direct space at 488 Madison Ave. As a result, Midtown's availability rate posted a nominal increase to 4.6% for the month, still much lower than the 5.9% recorded a year ago. In addition, the average asking rent fell to $61.64 per SF in February -- up 23% over the past year.

Downtown:

All told, Downtown recorded just 130,000 SF of leasing in February -- down 86% since this time last year. Downtown had its share of new space offerings hit the market, as well. A handful of small- to mid-sized availabilities, including a 78,000 SF block at Two World Trade Center, yielded negative 190,000 SF of absorption for the month. This precipitated a 0.2-percentage-point rise in the availability rate to 4.9%, and the average asking rent recorded a moderate increase to $44.92 - up 1% in February and 31% over the past year.

Midtown South:

Leasing volume was up in just one submarket in Midtown South in February compared to the previous month. New available space opportunities included a 50,000 SF partial floor at 375 Hudson St. As a result of space returning to the market and relatively modest leasing activity, Midtown South saw 230,000 SF of negative net absorption for the month. The availability rate reached 7.3%, though Union Square saw a minor decrease and Chelsea and Hudson Square/TriBeCa held steady for the month. Asking rents across the board remained fairly static for the month, falling just $0.24 overall during the month to $47.33 per SF on average, still 29% higher than this time last year.