by Shane Henson — August 1, 2011—New office leases are being signed at a record pace in Manhattan, according to second-quarter statistics released by Cushman & Wakefield, a global provider of real estate solutions.
A total of 17.6 million sq. ft. of new leases were signed in the first six months of 2011, the highest six-month total in more than a decade, according to the report. In May and June alone, new leasing activity totaled nearly 8 million sq. ft., the highest two-month total in Cushman & Wakefield’s records. Year-over-year, leasing activity is up 40% from the 12.6 million sq. ft. signed in the first half of 2010.
Strong leasing activity helped lower the overall average vacancy rate for Manhattan to 9.4% at mid-year 2011, a decrease of 0.5 percentage points from one month ago, marking the largest one-month decrease since December 2005. Year-over-year, the overall vacancy rate declined 1.4 percentage points from 10.8% at midyear 2010. The vacancy rate for class-A space declined steadily to 10.0% at midyear 2011, down from 10.7% at the end of the first quarter and down from 11.5% at this time a year ago.
Overall asking rents in Manhattan registered $55.52 per square foot at midyear 2011, up $1.21 or 2.2% from $54.31 per square foot at midyear 2010. The average asking rent for Class-A space also rose, registering $63.58 per square foot at midyear, up $1.62 or 2.6% from $61.96 per square foot at the end of 2010.
Other key statistics Cushman & Wakefield found:
- The Midtown market continued to lead the way in activity, with 6.1 million sq. ft. of new leases in the second quarter. Eight transactions of 100,000 sq. ft. or larger closed in Midtown during the second quarter, up from seven transactions in the first quarter.
- The vacancy rate in Midtown South registered 7.1% at midyear 2011, which was by far the lowest vacancy rate of any major central business district in the nation, down from 9.2% at this time last year. As a result, asking rents in Midtown South increased 2.1% from this time last year, to $44.63 per square foot from $43.71.
- The Downtown market saw strong activity in the second quarter. Asking rents Downtown rose more rapidly than other markets, with overall rents up 4.2% from a year ago, to $39.38 per square foot, while Class-A rents are up 11.3% to $44.29 per square foot.
- The top five leases of the quarter included a 1 million sq. ft. lease for Cond Nast at One World Trade Center, a 900,964 sq. ft. lease for Nomura Holding Inc. at 825 Eighth Avenue, a 249,579 sq. ft. lease for Wells Fargo at 150 East 42nd Street, a 244,185 sq. ft. lease for NBC at 1221 Avenue of the Americas and a 210,841 sq. ft. lease for Wilmer Hale at 7 World Trade Center.
- By industry, financial services accounted for 28.2% of all leasing year-to-date, followed by information/media at 27.5% and government, education and social services at 11.8%. This compares to the first half of 2010, when financial services accounted for 22.6%, followed by legal services at 12.1% and government, education and social services at 11.9%.
- The vacancy rate in Midtown South registered 7.1% at midyear 2011, which was by far the lowest vacancy rate of any major central business district in the nation, down from 9.2% at this time last year. As a result, asking rents in Midtown South increased 2.1% from this time last year, to $44.63 per square foot from $43.71.
