Manhattan Office Leasing Jumps on Financial-Sector Hiring
October 08 2017 - 9:29AM
Dow Jones News
By Keiko Morris
Manhattan office leasing kicked into high gear in the third
quarter as financial services jobs surpassed prerecession levels in
August, but new construction kept rental increases low, according
to new statistics released by real estate services firm JLL.
Leasing activity, which includes new deals and renewal
transactions, reached 9.85 million square feet in the third
quarter, a 35% increase from the 7.3 million square feet of leasing
in the same period of 2016, JLL said.
Eight of the largest office leasing deals were located in
Midtown Manhattan, and seven of the eight were for space west of
Fifth Avenue, continuing the westward movement that has been taking
place since the beginning of the year, JLL said.
During the quarter, big firms such as money manager BlackRock
Inc., tech giant Amazon.com Inc. and global professional services
firm Accenture signed deals each for hundreds of thousands of
square feet in new developments rising on the far West Side, JLL
noted.
"Those collective deals are game-changers," said Cynthia
Wasserberger, executive managing director.
Those large deals have helped raise interest in the far West
Side and played a part in pushing rents up into the $100 range, Ms.
Wasserberger said.
But while this past quarter's vacancy rate in Midtown Manhattan,
which includes the far West Side, dropped to 10.4% from 11.7% in
the previous year, average asking rents in that submarket dropped
by 0.7% to $75.19 a square foot.
Overall vacancy in Manhattan rose 0.2 percentage point to 10.2%,
while average asking rents for the island rose 0.7% to $71.12 a
square foot, JLL said. The virtually flat rents are a result of
landlords trying to maintain rent levels in the face of new office
construction adding space in Midtown and Downtown.
"Asking rents are pretty stable, and landlords are trying to
hold to those numbers, but concession dollars -- free rent, [tenant
space improvement] allowances -- have really increased
substantially," Ms. Wasserberger said.
The financial-services sector, a critical part of Manhattan's
office market, also recouped the jobs lost during the recession,
reaching 477,800 in August, JLL said. Although the job count for
the sector remains below its record high of 525,000 in 1990, the
August numbers surpassed the 472,900 positions recorded in December
2007.
The finance, insurance and real-estate industries together
remained dominant players in Manhattan office leasing, accounting
for a third of all office leasing so far this year, JLL said.
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
October 08, 2017 09:14 ET (13:14 GMT)
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