Office leasing still blazing in Manhattan.
Park Avenue also led the Midtown market in terms of net absorption last month. This submarket absorbed 230,000 square feet of space on leasing activity of 360,000 square feet. Park Avenue also boasted several large lease signings that contributed to this exceptional performance in August, including Donaldson Lufkin & Jenrette's 216,345 square feet at 280 Park Avenue and 24,500 square feet at 230 Park Avenue, and WitTel Communication's 63,153 square feet at 250 Park Avenue.
In terms of overall performance among Midtown submarkets, the Fifth/Madison segment came in second, posting 30,000 square feet of net absorption on 240,000 square feet of total leasing activity. Major lease signings in this submarket included NationsBanc Montgomery Securities' 87,650 square feet at 9 West 57th Street and Mentmore Holdings' 53,984 square feet at 680 Fifth Avenue.
While the Park Avenue and Fifth/Madison segments performed well, Midtown as a whole had more space returned than leased in August. As a result, Midtown posted 300,000 square feet of negative net absorption last month, pushing the market's availability rate up slightly to 8.1 percent. The West Side was affected most, recording 350,000 square feet of negative net absorption on a mere 20,000 square feet of leasing activity. As a result, the West Side saw its availability rate jump two full percentage points to 5.2 percent, thus losing its title as Midtown's tightest submarket to Sixth/Rock Center with a 4.9 percent availability rate.
Despite Midtown's negative net absorption, overall asking rents jumped 3 percent in August to $42.43 per square foot. According to Insignia/ESG's August Office Market Report, the Fifth/Madison Avenue submarket posted the highest average asking rent last month at $55.47 per square foot, while the Penn/Garment submarket was the lowest at $28.03.
Financial District Continues to Dominate Downtown
Downtown's Financial District continued to dominate the Lower Manhattan leasing scene in August, registering 80,000 square feet of net absorption on leasing activity of 310,000 square feet. With far and away the most space available of Downtown's three submarkets, the Financial District saw its availability rate drop to just under 15 percent, and its average asking rent crack the $30 per square foot mark for the first time since the early 1990's, thanks in part to Guardian Life Insurance Company's 34,500 square-foot expansion at 7 Hanover square, and Dresdner Kleinwort Benson's 25,410 square-foot commitment at 67 Wall Street. Through August, tenants have leased 7.35 million square feet of space Downtown this year - a 29 percent increase from last year's total at this time.
Meanwhile, the WTC/WFC submarket recorded 40,000 square feet of net absorption on leasing activity of 110,000 square feet in August, lowering its availability rate slightly to a mere 4.3 percent. Faced with leasing up what small blocks of space remain available in the WTC/WFC segment, landlords dropped their average asking rent by 82 cents per square foot in August to $37.95.
Downtown's third submarket, the City Hall/Insurance segment, was the weakest performer in August, posting 7,000 square feet of leasing activity and 2,000 square feet of net absorption. As a result, this segment's availability rate was unchanged from last month at 13.1 percent, and is down less than a percentage point over the past year - a sharp contrast to the approximate eight-point decline in the Financial District and the WTC/WFC availability rates over the same period last year.
Downtown's average asking rent jumped nearly $5 per square foot in the past year to $31.04. The WTC/WFC posted the highest average asking rent Downtown at $37.95 per square foot, while the City Hall/Insurance segment registered the lowest asking rent at $27.77 per square foot.
Chelsea, Flatiron District Power Midtown South Leasing
The Midtown South leasing market received a big boost last month, as Chelsea and the Flatiron District powered the market to 360,000 square feet of leasing activity. Chelsea, which accounted for 61 percent of the market's total leasing activity, recorded 180,000 square feet of positive net absorption on 220,000 square feet of leasing activity, and lowered its availability rate more than four percentage points to 4.8 percent. Just one year ago, this submarket had registered an 1.3 percent availability rate. Meanwhile, the Flatiron District, which weighed in with 22 percent of the market's total leasing in August, absorbed 50,000 square feet on 80,000 square feet of leasing activity, and saw its availability rate drop a half point to 3.5 percent.
Conversely, Midtown South's Hudson square/Tribeca segment fared the worst, with 120,000 square feet of negative net absorption on 30,000 square feet of leasing activity. This performance raised this submarket's availability rate more than a full percentage point to 4.3 percent.
Overall, the Midtown South leasing market is more active than it was last year at this time. Year-to-date leasing activity totaled 2.38 million square feet, and is up 3 percent from last year. And absorption of 1,52 million square feet is up by nearly 9 percent. The market's overall availability rate fell slightly in August to 4.5 percent a little less than half of what it was a year ago.
Midtown South's average asking rent rose by 5 percent in August to close the month at $29.11 per square foot. NoHo/SoHo was the most expensive submarket in Midtown South, with an average rental rate of $34.49 per square foot, while the Park Avenue South/Madison square segment had the lowest asking rent at $23.57 per square foot.
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|Title Annotation:||Third Quarter Review; New York, New York|
|Publication:||Real Estate Weekly|
|Date:||Oct 7, 1998|
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