While leasing activity in the first half of 2016 hasn’t exactly been going gangbusters, it’s still higher than the historical averages, said Cushman & Wakefield.
The real estate firm on Tuesday disclosed activity data for the second quarter.
“While 2016 has not been as strong as the past two years, it is still well above historical averages as New York City’s economy continues to be one of the nation’s leaders in employment growth,” said Ron Lo Russo, president for the New York Tri-State region. According to Lo Russo, with leasing activity through the first six months of the year hitting 13.6 million square feet for the Manhattan commercial real estate market, “We’re ahead of the historical average.”
Richard Persichetti, Cushman’s research director for the Tri-State/Northeast region, predicts that tenants demand and strong market fundamentals to continue, a trend that is expected to “push overall leasing activity to 2012 and 2013 levels, both strong years.”
According to data compiled by Cushman, June represented the highest leasing month of the year to date at 2.9 million square feet leased. The technology, advertising, media and information sectors accounted for 41 percent of the new leases over 10,000 square feet. Overall, Manhattan average asking rents was $72.99 a square foot in June, surpassing the previous peak of $72.97 a square foot reached in September 2008. The overall vacancy rate for the borough dropped to 8.8 percent in the second quarter, down from the 9 percent in the first quarter.
Asking rents in the Midtown, Midtown South and Downtown markets continued to rise: Midtown South rose 2.6 percent from a year ago to $68.62 a square foot; Midtown increased 3.6 percent to $79.18, and Downtown was up 1.5 percent to $59.14. The same markets also saw vacancy rates fall: Downtown fell 9.8 percent to single digits for the first time in four months; Midtown declined 9.2 percent and Midtown South remained stable at 6.3 percent. Cushman said the Midtown South market continued to be one of the “tightest Central Business Districts in the U.S.,” another way of saying it’s a highly sought-after market.