News
HOW HIGH CAN MIDTOWN SOUTH GO?
October 1, 2012
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| Colliers East region president Joe Harbert (whom we snapped with colleagues Marty Meyer and Peter Kozel at the 50th Street Bobby Van's last week) tells us there's no foreseeable max on office rents on hot, tech-centric Midtown South, despite its older building stock. The lowest vacancy rate most CRE pros have ever seen is 3.8%, and Midtown South is almost there. Rents will level off when they reach the average Class-A rate in Midtown (now being referred to as Midtown North), whatever those might be at the time. You'd think it's too early to talk leasing in Manhattan West since projects there won't deliver for four years, but developer Brookfield is already enticing 1M SF and larger tenants. That includes those that hadn't even considered moving like owner-occupiers (1031 exchange, anyone?). The tax breaks, signage, and amenities (residential, 7 line extension, High Line) will make deals worth it no matter the lease rates elsewhere in Midtown, Marty says. |
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| The 8% spread between asking and taking rents in Midtown is big considering leasing activity there has been just fine. The reason lease rates are going down, says Mark Friedman (right, with colleague Alan Desino), is because landlords underwrote at such high expectations. Alan adds that landlords' expectations also get closer to tenants' when space goes from available to actually vacant. |
