Midtown Office Market Hits Pre-Recession Levels with Highest Recorded Rent Since 2008
January 8, 2015
Katherine Clarke, New York Daily News
The Midtown office market is back on top.
Commerical office rents in the neighborhood were back to pre-recession levels for the first time at the end of 2014, propelled by tight vacancy and positive employment numbers.
The average asking rent for a Class A Midtown office building was a whopping $82.31 per square foot in the fourth quarter, a 9% jump from the previous year, according to a new report by commercial brokerage Avison Young.
“As New York’s private sector employment figures continue to improve, we’re seeing increased demand for office space throughout the city, resulting in historically high rental rates,” said Arthur Mirante, tri-state president at Avison.
Among the most high-profile new Midtown leases in the fourth quarter was a major deal inked by e-commerce giant Amazon, which took 470,000 square feet at 7 W. 34th St., opposite the Empire State Building. The online retailer plans to operate offices as well as a storefront at the location.
While Midtown posted the biggest gains in rents, prices were up across Manhattan. The overall Manhattan asking rent went up by 6.7% year-over-year to $65.14 per square foot, the report shows.
Downtown’s vacancy rate is also finally inching down as leases start to stack up at 1 World Trade Center.
Vacancy for Class A ofice space in the neighborhood fell from 15.9% one year ago to a more manageable 11.3%, thanks to a few key deals at the iconic tower. Among the most notable deals was the video game company High 5 Games’ lease for 87,000 square feet on the 58th and 59th floors .
But downtown is still a bargain compared to Midtown.
The average downtown rent was $23 a foot lower than Midtown, according to Avison’s data.