Manhattan Tech Firms Lease 2.6 Million Square Feet in H1 of 2014

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According to JLL, New York City's tech sector continued its usual growth trajectory in May 2014. Tech employment in Manhattan increased by 5.8 percent year-over-year, again marking the largest industry growth among all major sectors. Month-over-month however, the sector experienced a decline, losing 600 jobs in May.
 
Venture capital kept funding deals as well. The number of tech venture capital funding rounds climbed to 48 in June from 37 in May, but the amount of capital raised decreased. Venture capital funding declined in June to $498.6 million from $649.3 million in May. Still, funding remained elevated and was up 34.7 percent from June 2013. To date, tech companies have raised more than $2.4 billion.
 
After robust leasing in May (totaling 839,732 square feet) due to a number of large leases, tech leasing activity fell in June to 338,781 square feet. However, more tech leases were signed (18 in June versus 11 in May). Only one transaction greater than 50,000 square feet was signed. Nevertheless, tech remains a top contender in the share of total square feet leased. Tech firms have committed to more than 2.6 million square feet year-to-date, and the tech sector accounted for almost 15 percent of all square feet leased in Manhattan as of midyear 2014. The industry is second only to financial services, which is historically the leading user of Manhattan office space.
 
JLL said that though the bulk of tech leasing is usually in Midtown South, Midtown captured the largest number of transactions in June. More than half of all deals (10) were signed in Midtown, compared with just four in Midtown South. Four transactions were also completed Downtown. Rocket Fuel, the media-buying platform that utilizes artificial intelligence, signed the largest deal in June, taking 90,000 square feet at 100 W 33rd Street in the Penn Plaza/Garment District. The second largest lease was also signed in the same submarket: software-solution provider Varonis Systems will occupy 46,068 square feet at 1250 Broadway.

According to Jim Wenk, executive vice president with JLL's Technology Group based in New York City, "Larger scale transactions from 80,000 square feet to 200,000 square feet have just closed, including Yodle, Yelp, and MediaMath. There was equal disbursement of the locations and buildings with the three transactions, including a new trophy building at 4 World Trade Center; a Midtown South, Class A bellweather at 11 Madison Avenue; and a newly renovated building at 330 West 34th Street. In all cases, larger tenants chose larger floorplates of 40,000 square feet or higher because of space efficiency, creativity and employee density."

Wenk further commented, "There are numerous other technology and media companies searching for large blocks including AMC, WebMD, Buzzfeed and Amazon. We expect these companies to land over the next three to six months."

Manhattan office market for May 2014 highlights also include:

• Tech firms have committed to more than 2.6 million square feet year-to-date, accounting for almost 15 percent of total leasing activity in Manhattan as of midyear 2014. (The industry is second only to financial services, which is historically the leading user of Manhattan office space.)

• New York City high-tech employment increased by 5.8 percent year-over-year with the addition of 3,500 jobs (this was the largest industry growth among all major sectors).

• Tech venture capital funding remained elevated and was up 34.7 percent from June 2013.