Manhattan Office Leasing Reaches 11-Year High, Cushman & Wakefield Says
A total of 30.1 million square feet (2.8 million square meters) of new leases were signed in 2011, the New York-based brokerage said in a statement today. That was the most since the 31.5 million square feet of deals reached in 2000, according to Cushman. The vacancy rate fell to 9.1 percent from 10.5 percent at the end of 2010.
“You had pent-up demand coming out of the recession,” said Joe Harbert, Cushman’s chief operating officer for the New York metropolitan area. “Corporations realized that, relative to the past market, this was a market in which a company go could go out and, for a reasonable price, see a lot of alternatives and find high-quality space.”
Financial companies’ demand for office space has held up in the face of job reductions and the slowdown in the U.S. economy, executives from Boston Properties Inc. and Brookfield Office Properties Inc. said in September. Last year, financial services firms worldwide disclosed plans to eliminate more than 200,000 jobs as they grapple with market turmoil and fallout from Europe’s sovereign-debt crisis.
The industry that accounts for about a third of office space leased in Manhattan is in “very cautious mode,” and the cutbacks will probably curb leasing deals, according to Ken McCarthy, Cushman’s senior economist and senior managing director for research.
“This year is going to be the year that New York doesn’t outperform, but matches what’s going on elsewhere,” McCarthy said at a briefing today.
In 2011, there were 51 lease agreements for more than 100,000 square feet, the most since 2004, when Cushman began tracking the data, Harbert said. Of those deals, 22 were renewals.
For Class A office space in Midtown, the average asking rent rose 5.9 percent in the fourth quarter from a year earlier to $71.22 a square foot. The rate is up 9.5 percent from the bottom reached in the first three months of 2010, Harbert said.
Net effective rents, or what tenants actually paid, averaged $56.47 per square foot, up 12 percent from a year earlier, according to the report.
Asking rents borough-wide climbed 5.3 percent from a year earlier, to $57.23 a square foot.
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