Manhattan office leasing and building sales soar

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Office leasing and investment sales activity both jumped sharply in Manhattan in the first three months of the year, signaling a renewed confidence among corporate tenants and buyers that the economy is strengthening, according to a report released Tuesday by Cushman & Wakefield Inc.

New leasing activity totaled 5.7 million square feet for the quarter ended March 31, an 84% surge from the hugely depressed year-ago period. First-quarter leasing was also up 14% from the fourth quarter of 2009.

Meanwhile, investment sales activity for transactions worth $10 million or more soared to $3.3 billion, triple the measly $1.1 billion worth of deals that closed a year earlier. In fact, the first quarter total is nearly equal to the $3.5 billion of transactions of that size logged in all of last year. Indeed, eight deals in that price range have either closed or are under contract, compared with seven such transactions in 2009.

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Overall asking rents fell to $55.38 a square foot, their lowest point in three years. That's down 24% from their peak of $72.97 in the third quarter of 2008. Effective rents, which take into account months of free rent and other landlord incentives, are down even more steeply from the peak.

Downtown's performance bucked the trend of increased leasing activity. In that market, leasing activity fell to 755,000 square feet, down 18% from the year-ago period. There were also no deals where rents surpassed $50 a square foot or where the amount of space leased was over 100,000 square feet.

There is tremendous concern about the downtown market because so many large companies including Merrill Lynch and Deloitte have leases expiring in the next few years.

Summing up the Manhattan market Mr. Harbert said, “We may not have hit bottom, but we are close to it.”

http://www.crainsnewyork.com/article/20100406/REAL_ESTATE/100409940