CBRE Issues Q3 2017 New York City Office MarketViews

10/11/17

Manhattan leasing activity totaled 7.4 million sq. ft. in Q3 2017, 12% above its five-year quarterly average. Year-to-date, Manhattan has seen nearly 21.1 million sq. ft. of leasing activity, 24% ahead of last year. The average asking rent was $73.98 per sq. ft.—virtually unchanged quarter-over-quarter and year-over-year. The availability rate fell to 11.7%, down 30 basis points (bps) from Q2 2017, but up 30 bps from one year ago. Quarterly net absorption registered 1.45 million sq. ft.

“With strong employment growth and an active roster of FIRE, TAMI and government tenant leases, the Manhattan office market continues to perform well,” said Nicole LaRusso, Director, Research & Analytics, CBRE Tri-State. “Midtown has a particularly strong showing this quarter, posting more than 1 million sq. ft. of positive absorption for the first time since Q2 2015.”

Among the MarketView highlights:

Midtown – Quarterly net absorption registered 1.55 million sq. ft. in Q3 2017, driving the year-to-date total into positive territory for the first time since Q4 2014. The availability rate dropped to 11.6%, its lowest level since May 2016, and decreased quarter-over-quarter in eight of the nine Midtown submarkets. Midtown’s leasing activity totaled 4.84 million sq. ft., outperforming its five-year quarterly average by 19%. With 3.09 million sq. ft. of year-to-date leasing activity, the Penn Station submarket has in only three quarters exceeded its largest year-end total. Financial services accounted for 33% of year-to-date leasing activity, followed by technology at 9%.

Midtown South – Large deals continued to prove elusive in Q3 2017, keeping leasing activity for the quarter at 1.14 million sq. ft., 8.8% below its five-year historical average. Transactions below 25,000 sq. ft. remained the driving force for deals completed in Q3 2017, making up 59% of all leasing activity. The average asking rent saw no change on a quarter-over-quarter basis, but is up 4% from a year ago. The availability rate rose a marginal 10 basis points (bps) to 10.8%, although it stands substantially higher than its late 2015 cyclical low, largely due to new product. Although the market has seen activity from a wide variety of tenants year-to-date, TAMI tenants regained their status as the market’s driving force this quarter. TAMI leasing activity more than doubled quarter-over-quarter, accounting for 56% of all Q3 2017 activity.

Downtown –Leasing activity totaled 1.43 million sq. ft., an increase of 19% from Q2 2017 and 9% above its five-year quarterly average. Co-working tenants accounted for 16% of quarterly activity, while government tenants, long a cornerstone of the market, accounted for 30%. The trend of tenant relocations into the market continued this quarter, bringing the total migration to Downtown to approximately 1.5 million sq. ft. year-to-date. This quarter also saw two tenant departures from Downtown, as Guardian Life Insurance and Fragomen announced plans to relocate to Midtown’s West Side. Quarterly net absorption was negligible and availability remained unchanged quarter-over-quarter. Average concession packages now stand at $83 per sq. ft. with 12 months of free rent.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.

It's on us. Share your news here.

Submit your stories and articles to citybizlist today.