April 4, 2018 / 12:00 AM / in 4 months

Manhattan first quarter office leasing slips but market remains strong

NEW YORK (Reuters) - Leasing activity for office space in Manhattan slipped in the first quarter, but strong jobs growth has kept availability rates low, data showed on Tuesday.

The Empire State Building and One World Trade rise over Manhattan as viewed from the Top of the Rock observation deck in New York, U.S., February 14, 2018. REUTERS/Lucas Jackson

New leasing fell 7.0 percent to almost 7.1 million square feet (660,000 square meters) in the first quarter, down from 7.6 million square feet a year earlier, with March the slowest month of the period, commercial real estate brokerage Cushman & Wakefield reported.

Leasing activity slid 17.8 percent from a year ago and declined 22.5 percent from the fourth quarter, according to different data from brokerage Colliers International.

In part, that was because Twenty-First Century Fox and News Corp signed new and expanded leases totaling 1.2 million square feet at their Sixth Avenue headquarters in the first quarter of 2017 that lifted the comparative numbers for last year’s period, Colliers said.

In addition, fourth quarter activity is generally higher than other quarters as brokers and tenants work to get deals done before the year’s end, it said.

Jobs growth in Manhattan rose 2 percent over the 12 months to February, a rate that was higher than the state’s 1.2 percent and the U.S. rate of 1.8 percent, the New York State Labor Department has said.

Office space availability has fluctuated around 10 percent in recent quarters, while sublet availability has been under 2 percent for a number of years, said Craig Caggiano, an executive director at Colliers.

The steady rate of availability despite more office space being added to the market has shown “a remarkable recovery from our Great Recession lows,” said Caggiano.

Average asking rents declined to $73.05 a square foot from $73.92 a year ago, but rose from $72.74 in the fourth quarter of 2017, Colliers said.

Since the market’s trough in March 2010, asking rents have climbed 53.2 percent downtown, 49.2 percent in midtown south and 24.4 percent in midtown, according to Cushman & Wakefield.

Building sales almost doubled to $5.2 billion from a year ago and from $2.58 billion in last year’s fourth quarter as Google closed on its record-breaking $2.4 billion purchase of Chelsea Market, Colliers said.

The average price per square foot paid for a Manhattan building going for more than $10 million was $890, up from $837 a year earlier, it said.

Reporting by Herbert Lash, Editing by Rosalba O'Brien

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