Negative absorption continues in Manhattan

Real Estate Weekly, June 13, 2001

According to a recent report by Grubb & Ellis, the Manhattan office market-continued to exhibit substantial negative absorption in April, totaling 1.4 million SF. Year-to-date; the market has gained 3.4 million SF of negative absorption, mostly in class "B" properties.

This month's negative absorption rate was evenly spread between the Midtown, Midtown South, and Downtown markets. However, the Downtown market has suffered the most this year, accumulating 1.5 million SF of Manhattan' s total negative absorption.

Average asking rents for all property classes dropped to $55.86 per SF, down from $56.46 one month earlier. This is the largest one-month decrease in asking rental rates since economic uncertainty developed during the third quarter of last year.

Asking rents in all three categories fell this month, but class "B" asking rental rates registered the largest drop of $1.40 per SF. This lowered the Manhattan class "B" weighted average asking rent to $47.67 per SF. The most heavily hit market in terms of pricing was Midtown South, losing more than $2.30 per SF in overall asking rental rates.

Good news in the market during April included Bloomberg's pre-leased 700,000 SF in Vornado's 731 Lexington tower; the selection of Edward J. Minskoff Equities as the developer of BPC Site 5B; Bank of America's lease for 171,500 SF at 9 W. 57th St.; Alliance Capital Management renewed 79,018 SF lease at 1345 Sixth Ave; and CMP Media's 52,000 SF lease at 75 Ninth Ave.