Midtown leasing tops a million square feet.

The Midtown Manhattan office market topped a million square feet of leasing activity in April, propelling the year-to-date level to 6.63 million square feet - a 21 percent increase over last years total at this time.

In contrast to this strong leasing performance, however, net absorption totaling 155,000 square feet for April and 605,000 square feet year-to-date is well off last year's exceptional level of 2.9 million square feet during the first four months.

According to Insignia/ESG's May Office Market Report, Midtown's overall office availability rate dropped slightly in April to 8.8 percent - down more than three percentage points from a year ago. The Sixth Avenue/Rockefeller Center submarket boasted Midtown's lowest availability rate at 4.2 percent, while the Murray Hill segment posted the highest availability rate of all Midtown submarkets at 15.8 percent.

Four major lease signings contributed to the market's robust leasing performance in April: Health Insurance Plans of Greater New York (76,000 square feet at 132 West 31st Street), United Way of New York (61,000 square feet at 2 Park Avenue), Merrill Lynch (57,000 square feet at 153 East 53rd Street) and Bank Leumi Trust Co. (48,000 square feet at 420 Lexington Avenue).

According to Insignia/ESG, Midtown's average annual asking rent rose by $1.35 in April to $38.79 per square foot. The Fifth/Madison Avenue submarket saw its asking rent rise nearly $2.50 from last month to $51.01 per square foot - the first time any Midtown submarket cracked the $50 per square foot mark this decade.

Downtown Leasing Slows

The Downtown market lost some momentum in April, as leasing activity was down 33 percent from a year ago and off 30 percent year-to-date. In addition, negative net absorption of 314,396 square feet posted the previous month is in stark contrast to the positive 223,336 square feet recorded in April 1997. However, for the first four months of the year, net absorption remains positive at 602,902 square feet.

Despite the slowdown in leasing activity, the Downtown market was able to post a respectable 521,871 square feet of leasing activity in April, thanks in part to several large lease signings including IBJ Schroder Bank & Trust Co.'s 213,000 square feet at One State Street Plaza and Colson Services Corp.'s 50,000 square-foot lease at 120 Broadway.

However, several large blocks of space were returned to the market, offsetting the month's leasing activity and accounting for the negative net absorption. Two of the largest blocks of space returned were Long Term Credit Bank of Japan's 161,000 square feet at 1 Liberty Plaza and Credit Suisse First Boston's I 10,000 square feet at 100 Wall Street.

Downtown's availability rate of 14.8 percent remains the highest of the three Manhattan markets - largely due to the continuing glut of space in the Financial District, which accounts for more than 80 percent of the total Downtown availability. In contrast, the City Hall/Insurance submarket and the World Trade Center/World Financial Center segment posted availability rates of just 7.5 percent and 6 percent, respectively.

According to Insignia/ESG's Office Market Report, average asking rents Downtown rose by seven cents over the past month to close at $28.32 per square foot. The WTC/WFC segment posted the highest average asking rent at $32.66 per square foot, while the City Hall/Insurance segment posted the lowest asking rent at $23.57 per square foot.

Midtown South Continues to Post Impressive Numbers

The Midtown South market continues to post impressive numbers this year despite a slowdown in April. Although leasing activity of 279,436 square feet was down by 38 percent from a year ago, year-to-date leasing activity of 1.3 million square feet is up nearly 28 percent. Similarly, while net absorption of 31,750 square feet was well off April 1997's total, year-to-date absorption of a million square feet marked a 100 percent gain over the first four months of 1997.

Most of the market's activity in April is attributable to several major lease signings, including Level III's 60,000 square feet at 111 Eighth Avenue, Reed Elsevier's 46,000 square feet at 345 Hudson Street, Foundation Center's 34,000 square feet at 79 Fifth Avenue and Sulka & Company's 33,000 square feet at 111 Eighth Avenue.

Midtown South's top performer last month was Chelsea, which contributed leasing activity of 133,000 square feet 121,000 square feet of that coming at 111 Eighth Avenue alone.

Thanks to this exceptional performance, Midtown South has seen its availability rate nearly halved to 5.7 percent over the past year, making it the tightest of all three Manhattan markets. The Park Avenue South/Madison square submarket posted the lowest availability rate at a mere 3.5 percent, and the Hudson square/Tribeca segment was a close second at 4.3 percent.

Average asking rents continued to climb in April, closing at $24.02 per square foot a $2.98 increase from last year. Chelsea overtook the Flatiron district as the most expensive submarket, weighing in at an average of $27.64 per square foot, while the Hudson square/Tribeca segment had the lowest asking rents at $20.93 per square foot.

The Park Avenue South/Madison square submarket continued to see its average asking rent fall, largely because all of this submarket's prime space has already been leased.