NEW YORK CITY – According to Cushman & Wakefield research, Downtown Manhattan was the only major office submarket to register positive net absorption in the third quarter of 2013. The results further point to Lower Manhattan’s accelerating transformation from a financial services dominated sector to a diversified, 24/7 neighborhood.
In addition to 523,000 square feet of positive net absorption in the third quarter, Downtown saw its office leasing volume increase by 2.8 percent in October, compared to a year ago, while the average asking rent during that time increased 14.8 percent, to $45.66 per square foot. The activity has been driven in large part by non-financial tenants relocating from Midtown and Midtown South and the increasing quality of the available space. Updated research also shows that Downtown’s resident populations has grown to more than 63,000, supported by expanding retail, hospitality, parks, and transportation, propelling a more fully realized live/work/play environment.
“Downtown is its own success story,” said Tara Stacom, a Cushman & Wakefield Executive Vice Chairman. “Registering more than a half of a million square feet of positive absorption during the third quarter is remarkable. Lower Manhattan has re-invented itself as a 24/7 hub where creative and innovative companies can flourish, with full-service amenities such as upscale eateries, soon 1 million square feet of retail shopping and vibrant nightlife. For perhaps the first time in its history, Downtown is increasingly being seen as a tenant’s most desired option.”
Downtown’s two leasing sectors at the end of the third quarter were Information/Media (20.5 percent) and Government, Education, and Social Services (20.1 percent), followed by Real Estate (9.8 percent), Financial Services (9.1 percent), Health Services (8.2 percent), and Legal (8.0 percent). Member Organizations, Architects/Engineers, Insurance Services firms and tenants from various other sectors comprise the remainder.
As part of Lower Manhattan’s diversification, more than 30 firms from a variety of sectors have relocated from Midtown and Midtown South since the beginning of 2013. Among other transactions, Nyack College signed a 166,385 square foot lease at 17 Battery Place North, Droga5 signed a 91,440 square foot lease at 120 Wall Street, the American Arbitration Society signed a 79,688 square foot lease at 120 Broadway, the Pacific College of Oriental Medicine signed a 42,000 square foot lease at 110 William Street and the NYS Society of Public Accountants leased 34,500 square feet at 12 Wall Street.
The Cushman & Wakefield October research also showed that:
Downtown absorption totals were the highest recorded since second quarter 2011, when it registered 561,797 square feet
Despite nearly 3 million square feet of second-generation space returning to the total Manhattan market, available space Downtown declined by more than six percent
Downtown leasing activity also held the overall Manhattan office vacancy rate to 10.9 percent
Direct available space Downtown reached its lowest level in six months. Comparably, Midtown availability exceeded 22 million square feet for first time since May 2010.