Manhattan's Office Leasing Activity, Rents Uptick in April

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CBRE is reporting this week that Manhattan's office leasing activity totaled 3.02 million square feet during April 2015. This is 37% higher than the five-year monthly average of 2.21 million sq. ft. Monthly absorption moved into positive territory this month, measuring 210,000 sq. ft. at 11.0%, Manhattan's availability rate in April remained steady, compared to last month. The average asking rent finished the month at $68.54 per sq. ft., up 5% from the $66.04 per sq ft. average reported one year ago.

Midtown Manhattan's office leasing activity for April 2015 totaled 2.41 million sq. ft., a massive 79% above the five-year monthly average of 1.34 million sq. ft., and 49% higher than March leasing. This was the strongest month of leasing since April 2013, when monthly leasing was measured at 2.13 million sq. ft. Year-to-date leasing totaled 6.93 million sq. ft.--21% higher than year-to-date leasing for the same period in 2014. The largest transaction in Midtown was the 544,000-sq.-ft. pre-lease commitment by Skadden, Arps, Slate, Meagher & Flom at 1 Manhattan West. Monthly absorption continues to trend upward, ending April 2015 at 110,000 sq. ft.--its first time in positive territory this year. The availability rate remained flat at 11.2% but fell 60 basis points (bps) from the 11.8% recorded in April 2014. April's average asking rent increased slightly to $76.56, from $76.15 in March, and rose 3% from a year ago.
 
The Midtown South office market's leasing activity in April totaled 367,000 sq. ft., 14% below the five-year monthly average of 427,000 sq. ft. This was the twelfth consecutive month of average leasing activity above 300,000 sq. ft. Midtown South was the only market in Manhattan to have a renewal among its top transactions in April. Year-to-date leasing, at 1.76 million sq. ft., is 10% lower than the same time period in 2014. After stepping into negative territory in March, monthly absorption again entered positive territory in April, ending the month at 153,000 sq. ft. April's availability rate decreased 30 basis points (bps) compared to March and dropped 220 bps from one year ago. The average asking rent has remained virtually unchanged over the course of the last three months.
 
Meanwhile downtown Manhattan's leasing activity for April 2015 totaled 250,000 sq. ft.--43% lower than the historical average of 440,000 sq. ft. and the first time since October 2014 that monthly leasing dipped below 300,000 sq. ft. After strong renewal activity in March, all of April's top five transactions were new leases or commitments for expansion space. Monthly absorption dipped slightly into negative territory, ending the month of April at 52,000 sq. ft. The availability rate increased 10 basis points (bps) since the end of March, and dropped 120 bps from one year ago. April rents dipped slightly to end the month at $56.73, compared to $56.94 in March--although this is up 16% from a year ago.