Lower Manhattan office rents peak as revived downtown booms
Asking rents for office space in downtown New York hit a record high in May as construction of a new tower at the World Trade Center and the migration of firms to a revitalised Lower Manhattan helped lift rental rates, brokerage CBRE Group Inc said.
The average rent landlords are seeking in downtown climbed to $62 a square foot last month when the addition of 1.7 million sq ft at 3 World Trade Center is added to the office space available for lease, the brokerage said.
Since January 2011, 393 have moved in, compared with only 74 leaving, CBRE said. The relocations highlight the transformation of a Lower Manhattan hit hard by the Sept. 11, 2001, attacks into a highly desirable neighbourhood.
Downtown’s revival has been driven by firms based in technology, advertising, media and information, or TAMI, which account for the largest amount of leasing at 30 per cent. More than half of these firms chose space in buildings built before World War Two.
The TAMI sector has also driven jobs growth in the city since 2010, with new employment in these firms outpacing the financial services industry, traditionally the biggest jobs creator in Manhattan.
Unemployment in the city is near record lows, with the jobless rate in Manhattan last month climbing three-tenths of a per cent off an all-time low of 3.5 per cent in April, according to the New York State Department of Labor.
The rate is lower than the U.S. unemployment rate of 4.3 per cent in May.
The desire of millennials to “live, work and play” in their neighbourhood has helped turn Lower Manhattan more residential and upscale. The median income of people ages 18 to 44 living in Lower Manhattan is $161,739, according to the Alliance for Downtown New York, which promotes business in the area.
Manhattan’s revival as an office market can also be seen in the narrowing of the gap to 23.5 per cent from more than 43 per cent a decade ago between asking rents in Midtown, a bastion of Corporate America, and downtown.
The volume of leasing has climbed above a five-year average, which is another sign of the market’s vitality, CBRE said.
The increase in rents above $60 a sq ft downtown marks a threshold, according to Colliers International, which expects to report asking rents for Manhattan will be $63.46 a sq ft at quarter’s end.