Newmark releases first quarter office market analysis.
The decline in Midtown's available supply of space was spurred by super-hot Grand Central and Sixth Avenue/Rockefeller Center segments - the only two Midtown districts to report declining availabilities - which experienced 1.3 million square feet and 648,105 square feet of positive net absorption, respectively. The amount of space absorbed in these two segments more than offset the slight increases in availabilities posted by the other Midtown segments.
Midtown's Sixth Avenue/Rockefeller Center segment remained among the tightest submarkets, with an availability rate of just 4.2 percent, followed closely by Park Avenue, which boasted an availability rate of a mere 4.4 percent as of the end of the quarter. At 8.3 percent, East Side's availability rate - the highest of all Midtown submarkets - was still well below demand/supply equilibrium.
The title for highest asking rents in Midtown went to Upper Fifth Avenue/Plaza, which averaged a strong $58.57 per square-foot, an increase of $3.17 per square-foot from the previous quarter. At $57.72 per square-foot, Midtown's Sixth Avenue/Rock Center district was a close second, while the Grand Central segment posted the lowest average asking rent in Midtown at $46.81 per square-foot - a veritable bargain in the high-price Midtown area.
Availability Tightens Further in Midtown South
Midtown South remained the tightest market in Manhattan, as its overall availability rate dropped to a mere 4.8 percent in the first quarter of 2000. Moreover, sublet opportunities were virtually non-existent, with Lower Sixth Avenue, Chelsea, Hudson Square and the Village reporting 0 percent availabilities. As the available supply of space continued to dwindle, average asking rents rose to new highs, ending the quarter at $35.71 per square-foot.
Out of the nine Midtown South submarkets, only the Park Avenue South segment recorded negative net absorption during the first quarter of the year. With an availability rate of just 0.6 percent and 102,388 square feet of positive absorption, Midtown South's NoHo/SoHo segment was the tightest submarket in Manhattan. A close second, the Village boasted an availability rate of only 0.9 percent.
The Hudson Square segment remained the hottest submarket in Midtown South, as Trinity Real Estate continued to meet demand by repositioning its office buildings.
According to Newmark's Office Report, Midtown South's Hudson Square segment posted the highest average asking rent at $42.82 per square-foot, a 36.7 percent increase over the previous quarter, while the Village recorded the lowest asking rent at $18.13 per square-foot.
Downtown availability drop of 40 percent in first quarter
Downtown's availability rate dropped to 6.2 percent in the first quarter of 2000 - a whopping 40.1 percent decrease over the last quarter - as high-tech companies and Internet ventures continued to lease up space. Downtown's overall absorption was positive at 2,156,856 square feet, more than double last quarter's total of 984,401 square feet. The increase in activity is largely due to the heightened demand from Internet companies that are increasingly looking Downtown when confronted with the space crunch in Midtown South. The scarcity of quality product coupled with sustained demand for space pushed the overall weighted average asking rent to $36.12 per square-foot, up from $33.12 at the end of 1999.
The World Trade Center/World Financial Center was the tightest district as the vacancy rate dropped to 3.1 percent and rents were pushed up to $42.54 per square-foot - a $2.29 increase since year-end. The financial district continues to post positive results, with availability in the single-digits at 6.2 percent and average rents at $34.95 per square-foot - the lowest rent of any Downtown segment.