The Real Deal reports that leases signed last year for class A office space in Downtown Manhattan – after taking into effect owner concesions, taxes, etc – barely broke even. Even in prime Midtown, leases signed in top buildings were the lowest they’ve been since 1995, when observers started tracking such numbers.
Office building owners of Class A towers earned an average of just $0.53 per square foot on the approximately 15 large leases inked in 2010, once taxes, operating expenses, electricity and concessions were accounted for.
Of course, brokers and owners are optimisic, as numbers for 2011q1 are up slightly for both downtown and midtown:
For Manhattan overall, average asking rents increased 3.3 percent in the first quarter to $49.51 per square foot. For Midtown (combined with Midtown South) asking rents rose by 3.8 percent to $54.91 per square foot.
Even Downtown, hit hard over the past year as Midtown and Midtown South improved, saw healthier figures, registering a small asking rent increase of .6 percent, to $39.62 per square foot.
Of course, we have to consider the source, and be careful not to anchor onto these most recent observations:
But in a sign that the market remains wobbly, the availability rate increased in Midtown and Downtown in the first quarter of this year.
The Midtown availability rate rose by .3 points in the first quarter to 11.9 percent from the fourth quarter, and Downtown, the rate rose by .4 points to 13.4 percent, Studley statistics shows.
So, before we (er, landlords, management co’s, brokerages) crack open the champagne, perhaps we should pay attention to basic supply/demand dynamics, eh? Remember, especially downtown, WTC 1 is well-underway, and when it’s completed somewhere around 2013(ish), will flood the market with 2.6 million sqft of space.