November 16, 2017
New York City – An increase in demand for new construction in the Hudson Yards, Manhattan West and World Trade Center areas continues to benefit the Manhattan office market, according to Transwestern’s third quarter 2017 report on the Manhattan office market.
After recording seven straight quarters of negative absorption, strong leasing activity in the Midtown and Downtown submarkets attributed to 509,052 square feet of positive absorption in the third quarter of 2017. In addition, new construction brought online within the past year has kept average asking rents fundamentally strong.
“Large transactions stemming from the demand for new construction continue to shape the fundamentals of the Manhattan office market,” said Danny Mangru, Research Manager. “Over 50 percent of leasing activity recorded so far in 2017 has taken place in either new construction or majorly renovated buildings, a trend that has dominated the market over the past several years and strengthened in 2017.”
Highlights from the report include:
· Manhattan’s availability rate ended the quarter at 11.3 percent.
· Large blocks added in the third quarter resulted in 1.4 million square feet of newly available space.
· Midtown’s Times Square Midtown and Downtown’s Insurance District witnessed the largest increase in new available space.
· After seven straight quarters of negative net absorption, Manhattan posted over 500,000 square feet of positive absorption.
· Six transactions over 100,000 square feet of newly constructed space occurred on the West Side, reinforcing the year’s biggest trend and keeping absorption positive in Midtown during the third quarter.
· Downtown posted positive absorption, recording two transactions over 100,000 square feet.
Average Asking Rent
· The average asking rental rate marginally increased to $73.90 per square foot.
· New construction delivered this year has kept rents fundamentally strong.
· Downtown and Midtown South asking rents remain at all-time highs.
· The outlook for the remainder of 2017 remains mildly optimistic; strong demand for new construction will continue to drive the market through year end.
· Large transactions in the pipeline, specifically from new construction on the West Side, will continue to propel leasing.
· Availability and average asking rents are expected to remain near current levels to year end.
Transwestern is a privately held real estate firm of collaborative entrepreneurs whodeliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Tenant Advisory, Capital Markets, Asset Services and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Based in Houston, Transwestern has 35 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern. For updates from the New York office, follow @TranswesternNYC.
Kelsey Da Silva