Office leasing in Manhattan’s midtown south had its strongest month in more than five years and rents increased as the area’s popularity grew, according to a report by CBRE Group Inc.
Agreements were signed for 700,000 square feet (65,000 square meters) in July, up 59 percent from a year earlier. It was the biggest jump among the three primary Manhattan submarkets and the highest monthly space total for the area since May 2007, the Los Angeles-based commercial real estate services firm said today. The average asking rent surged 19 percent to $52.39 a square foot.
Midtown south, the mix of neighborhoods that’s popular among media and technology firms, had the lowest vacancy rate of all U.S. central business districts in the second quarter, according to brokerage Cushman & Wakefield Inc. The market, stretching roughly from 34th to Canal streets, is home to Google Inc. and EBay Inc.
Information technology companies are “adamant about being in that area,” said Ruth Colp-Haber, founding partner of Wharton Property Advisors Inc., a brokerage that represents Manhattan office tenants. “They don’t care about the quality of the building, they don’t care what the space looks like, they’re determined to be there.”
The availability rate in midtown south, a measure of vacant space being marketed for tenants, dropped to 8.3 percent in July from 9.7 percent a year earlier, CBRE said.
The New York Genome Center signed the month’s biggest deal in the area, with 151,934 square feet at 101 Avenue of the Americas. New York University took 125,000 square feet at 105 E. 17th St., and Weight Watchers International Inc. agreed to rent 124,365 square feet at 675 Avenue of the Americas, according to the report.
For all of Manhattan, leases were signed for 2.61 million square feet last month, up 19 percent from a year earlier. The average asking rent increased 8.3 percent to $56.03 a square foot, CBRE said. The total of 12.9 million square feet leased in 2012 is still 28 percent below the 17.9 million square feet for the year-earlier period, according to the report.
In Midtown, still New York’s priciest office market, the average asking rent climbed 7.1 percent in July from a year earlier to $64.46 a square foot. Leasing jumped 36 percent from a year earlier to 1.22 million square feet, CBRE said.
Downtown, home to the 1,776-foot (541-meter) 1 World Trade Center tower that’s scheduled to be completed in 2014, leasing plunged 20 percent from July 2011, to 690,000 square feet. The average asking rent increased 1.7 percent to $39.69 a square foot.