Rents for midtown Manhattan offices have risen by 22% , according to Studley Inc. Since the market bottomed out nine months ago, large financial firms in New York have been filling some of the most expensive office space in the US.
The cost of Manhattan office space is soaring as the city's economy picks up. Image courtesy of 57th Street Offices
Lease rates for the Plaza district, which is the area around the Plaza Hotel near Central Park, have increased by 43% since September 30th and now cost nearly $84 per square foot. This growth rate is nearly four times as high than the first nine months of 2004, which is when the office market in Manhattan began its revival from the last recession.
Midtown is definitely ‘the’ location for top international financial firms, and this is reducing vacancies in Grand Central Terminal, the Rockefeller Center and the Plaza neighborhoods. Not surprisingly, these areas also have the highest rents. This uptake in office space also reflects the growth in the jobs market, as Manhattan is now amongst the best performing economies in the US. In May, the city’s unemployment rate was at a 25 month low at 8.6%. There was a net gain of 10,400 jobs in the financial industry twelve months up to May.
Midtown locations like the Rockefeller Center are in high demand. Image courtesy of API
Overall, the vacancy rate for Manhattan offices fell from 12.2% to 11.3% at the end of June. This is the biggest drop in three years. The average rent being sought by landlords is currently $50.69 per square foot, which is an increase of 7.2% compared to a year earlier. Class A office rents are about $72.64 per square foot, which is an increase of 15% on the previous year.
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