Manhattan’s office property market broke a record in the second quarter, with a new high of 70 million square feet of available space.
According to a data report by Savillis, the availability rate rose by 20 basis points in the second quarter to 19.7%, the highest level recorded in six years. Tenants signed on for 6.9 million square feet of office space – down 6% from the first quarter and down 18% from one year earlier.
Savills noted office properties were still experiencing rent hikes despite the historic vacancy levels.
“Preference among many tenants for trophy or Class A+ space is driving rents higher in that segment of the market, while tenants are able to dictate terms to a greater extent for commodity Class A and Class B/C space,” said the Savills report, which found asking rents on Class A buildings in the desirable Midtown section of Manhattan were up 1.7% from the first quarter to $95.53 per square foot. In comparison, there was a 0.2% uptick in asking rents to $59.01 per square feet on Class B and C office buildings in the same neighborhood.