Office leasing declines significantly in Manhattan

Office leasing levels fell in Manhattan.

Property management companies in Manhattan experienced a decline in the number of new office leases in the so far this year, when compared to the same period in 2011, according to Cushman & Wakefield.

The total leasing activity for the first three quarters of this year was 26 million square feet, a decline from the 30 million square feet during that period last year. Additionally, when examining the first two halves of the year, 2011's figure had 24 million square feet of new leases, while this year experienced 16.8 million square feet of space leased.

"We are sort of just muddling along and kicking the can down the road. In some ways it seems more like a dumpster than a can, but we are still hanging in there and moving forward," said Lou D'Avanzo, vice chairman at Cushman & Wakefield, according to GlobeSt.

This year, more than one-third of leasing activity was renewals, which was significantly higher than the historical average of one-fifth of leasing activity, the report explained.

Manhattan market conditions mixed
The Midtown Manhattan market still saw a decline of more than 35 percent in total leasing activity from the third quarter of last year to the same point this year, but the vacancy rate may be about to rise. The report noted that it was 9.6 percent during the third quarter, but there was approximately 5.7 million square feet of new properties available for lease. At the same point last year, this was 6.4 million square feet.

D'Avanzo told the news source that rents have not changed significantly, but vacancies may rise in the coming months.

Midtown South has a vacancy of 6.6 percent, which was a jump from the second quarter's figure of 6.1 percent, the report noted. Additionally, the area's average price is nearly $9.30 more expensive than the Lower Manhattan area. Furthermore, average asking rents increased 10 percent in that time period, and are now more than $49 per square foot.

"It is no longer a market where you can call your shots and say I want to be between 14th and 23rd – you have to look at it in its entirety," Andrew Peretz, executive vice president of Cushman & Wakefield, told the news source.

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