Survey: Manhattan leasing steady in '93

Real Estate Weekly, August 11, 1993

Commercial leasing activity in Manhattan's Midtown, Downtown and Midtown South districts steadied overall through the first half of 1993, with strong leasing volume in some markets tempered by increasing availabilities in others.

So reports Stephen B. Siegel, president of the Edward S. Gordon Company, Inc. (ESG), in the firm's monthly analysis of the Manhattan commercial office market.

In Midtown, for example, consistently Manhattan's most vibrant market, the year-to-date leasing volume of 7.17 million square feet of space lagged slightly behind last year's figures of 7.2 million square feet of space. Availabilities, however, dropped to 15.9 percent from the 17.2 percent rate tracked this time last year.

Some 1.9 million square feet of space was leased in Midtown last choice for the remainder of the month alone, thanks primarily to a few sizable transactions. Most prominent, of course, was MasterCard International's commitment to approximately 349,000 square feet of space at 1345 Avenue of the Americas. Among others were the New York City Board of Education's commitment to 56,000 square feet of space at 500 Eighth Avenue; AFS International Programs's commitment to 51,000 square feet of space at 220 East 42nd Street; Minerals Technology's 46,000-square-foot lease at 405 Lexington Avenue; and Kirkland & Ellis's 45,000-square-foot lease at 153 East 53rd Street.

Leasing volume Downtown, aggregating 2.6 million square feet of space at mid-year, was also well ahead of the 1.97 million leased during the same period of 1992. Unfortunately, thanks to the return of space to the market, availabilities rose as well. Downtown's current rate of 22.7 percent compares unfavorably with last July's rate of 22.2 percent.

In other signs that the market is struggling for equilibrium despite strong leasing average asking rents have dropped $1.70 from $28.85 per square foot tracked last July to the current rate of $27.15 per square foot.

Clearly, the Downtown market remains vital, with more than 2 million square feet of space leased this year in its Financial District alone. Among the region's more recent deals GovPx took 12,000 square feet of space at 2 World Financial Center, and Canon Copiers leased 10,000 square feet of space at 90 William Street.

Not surprisingly, Midtown South continues to lag behind the Midtown and Downtown markets; in fact, its year-to-date leasing volume of 785,000 square feet even fell below last year's tepid 813,000-square-foot mid-year aggregate.

Within the district, some segments remain healthier than others. Chelsea and the NoHo/SoHo regions witnessed just 180,000 square feet of leasing activity so far this year, while the Flatiron, Park Avenue South/Madison Square and Hudson Square/Tribeca submarkets were the locations of district's activity.

Dominated by small users, who (at under 10,000 square feet in size) comprise some 49.6 percent of all 1993 leasing activity, the area nonetheless has lured the consulting firm Daytop, which leased 18,000 square feet of space at 380 Second Avenue.

The current availability rate of 17.9 percent (or 6.4 million square feet of available space) represents a slight but welcome drop from the 18.2 percent rate posted at mid-year 1992. Average asking rents have dropped as well, from $15.90 per square foot last year to $15.75 per square foot today.