New York markets continue strong pace.

Midtown's leasing activity accelerated significantly in February, rising 21 percent from a year ago to 1.2 million square feet. As a result, available space dwindled rapidly in the Midtown market and the availability rate fell another 0.4 percentage points to 12.8 percent for the month, according to Insignia/Edward S. Gordon Co., Inc.'s (Insignia/ESG) March Office Market Report.

As the market has continued to tighten, space being vacated does not remain idle for long. For example, Public Service Mutual Insurance (PSM) signed a 95,000 square-foot lease at One Park Avenue just a few months after Loews Corporation offered the space for sublease.

The Midtown market experienced 748,000 square feet of positive absorption in February, bringing its two month total to 1.2 million square feet In contrast, Midtown achieved 1.6 million square feet of positive absorption for all of 1996.

According to the Insignia/ESG report, Midtown's asking rent averaged $33.57 per square feet in February. Park Avenue led the way with the highest average rent, $43.90 per square foot, while Murray Hill rents were the lowest at $24.30 per square foot.

Small to Mid-Sized Transactions Dominate Downtown Market

Building on the strength of small and mid-sized transactions, the Downtown office market maintained a robust pace of leasing in February. In fact, during the first two months of 1997, total leasing jumped 53 percent from a year ago.

Spurred by ALX System's 37,000 square-foot lease at 123 William Street, the market experienced 406,000 square feet of total leasing during February. As a result, the Downtown market produced 178,000 square feet of positive net absorption, while its availability rate fell by 0.2 points to 22.2 percent. The Financial segment saw its availability rate drop to 25.3 percent, more than three full percentage points lower than a year ago.

According to the report, average asking rents lost another four cents in February, falling to $25.63 per square foot. The World Trade Center/World Financial Center segment posted the highest average asking rent Downtown at $31.80 per square foot, while the City Hall/Insurance segment posted the lowest asking rent at $22 per square foot.

Midtown South Availabilities Drop

Midtown South experienced another unremarkable month in February, with only 114,000 square feet in total leasing activity. However, even this sedate pace of leasing could not stem the decline in Midtown South availabilities, as almost no space was returned to the market.

Interworld Technology Venture's 47,800 square-foot lease at 395 Hudson Street in the Hudson Square/TriBeCa segment accounted for 42 percent of the total leasing generated in Midtown South for the month. This helped to trim a half point from this segment's availability rate, which has now dropped to 10.8 percent. Chelsea's availability rate experienced an even more dramatic decrease, falling 0.7 percentage points to 14.7 percent. For the market as a whole, February's availability rate slipped by 0.3 percentage points to 11.3 percent.

Midtown South's average asking rent dropped by 40-cents in February to $20.09 per square foot. The Park Avenue South/Madison Square segment commanded the highest rent at $25.90 per square foot, while the Hudson Square/TriBeCa segment posted the lowest asking rent at $14.60 per square foot.