New York Market Overview
- Total Manhattan Class A Office vacancies decreased from 8.5 % vacant to 8.2 % vacant
- Total New York City Office vacancy stayed at 7.3 % vacant
Manhattan saw a year-over-year increase in the number of investment properties sold during the first half of 2013 but declines in the overall number of transactions and property volume.
Office tenants signing new leases or expanding their current space were responsible for the majority of the biggest Manhattan commercial leases of the year, as opposed to tenant renewals.Only three out of the 10 biggest deals in the first half of the year were renewals, compared to six renewals in the same period in 2012. However, the biggest deal of 2013’s first six months was a renewal, when Macy’s renewed its lease for 647,000-square-foot space in 11 Penn Plaza.
Manhattan has seen an uptick in office leasing deals with rents per square foot in the triple digits in the first half of the year, signifying a growing demand for premium office space. There have been 35 deals with rents over $100 per square foot so far this year, compared to 41 in all of 2012. The 2007 peak of the market saw 113 deals, while in 2009 there were just 17.
New York City real estateProperty sales activity was $17.96 billion in the first half of 2013, a 41.3%increase over the previous year. Sales volume will be about on par with last year’s $41 billion because of large office building deals. The average price per square foot is now at $470 and will climb.
New York City investment sales dropped 6 percent in the first half of this year, to $13.3 billion compared with the same six months last year.
The amount of sublease space in the Manhattan office market fell in the second quarter of 2013 while the number of sublease deals increased..
Manhattan now shares the top spot for the tightest office market in the U.S.
The borough’s office vacancy rate dropped 0.1 percentage points to 9.7 percent in the second quarter. This ties it with Washington D.C. for the lowest office vacancy rate in the country. Washington has held the title for the past four years, largely due to the growing size of the federal government and stimulus measures.
The Manhattan office market enjoyed 1.7 million square feet of positive absorption in the second quarter, wiping out the negative absorption from the first quarter.
Overall leasing activity reached 17.1 million square feet in the first six months of the year, a 5.1 percent year-over-year increase. Class A asking rents dropped $0.48 per square foot to $69.32, while Class B asking rents continued to rise, up 5.5 percent since the first quarter to $50.78 per square foot.