Manhattan posts 1.3 Million SF of positive net absorption
At mid-year 2019, leasing activity has totaled 15.5 million SF, a figure that, while down 9% year-over-year, is still above the average mid-year total of 14.8 million SF. The FIRE sector accounted for 37% of leasing activity, recording five new leases over 100,000 SF. The coworking sector continued to make an impact, representing 10% of the quarter’s leasing activity. Midtown dominated big block transactions, recording ten new transactions exceeding 50,000 SF, including four over 100,000 SF. The Downtown market continued to boom, recording eight new transactions above 50,000 SF with three exceeding 100,000 SF, attributing to over 2 million SF of leasing activity. Midtown South witnessed a resurgence.
Availability dips, average asking rents increase to all-time high
Despite the market adding 12 large blocks exceeding 100,000 SF, the overall availability dipped to 7.3%, the lowest level since 2015. Both Downtown’s and Midtown South’s availability rates fell to lowest levels since 2016, at 12.3% and 8.4%, respectively. The average asking rent across Manhattan reached a new record high, increasing 2% from last quarter to $80.37 PSF, the first time the overall market topped the $80 PSF mark. Both Midtown’s and Midtown South’s average asking rents also increased to all-time highs, to $87.70 PSF and $83.69 PSF, respectively.
Sales volume up 147% quarter-over-quarter
After a cool start to 2019, total sales volume ended the second quarter of 2019 at $5.5 billion, up 147% from last quarter and up 62% from same period last year. The average sale price was $899 PSF. The largest transaction recorded this quarter was the $2.2 billion acquisition and sale-leaseback at 30 Hudson Yards. The Related Companies and Allianz Real Estate teamed up to buy and lease back Warner Media’s office condo space. Allianz Real Estate now owns a 49% stake in the property. Manhattan’s cap rate remained stable at 4%.