Midtown Manhattan office landlords are losing some power to set rents on their properties, even in the prized Park Avenue corridor, after five years of aggressive price-pushing.
Tenants at top-quality offices in Midtown paid 7.4 percent less in February than at the end of last year, after a 13.3 percent increase for all of 2015, according to data from research firm CompStak Inc. Landlords including SL Green Realty Corp., Manhattan’s biggest owner of office towers, have lowered asking rents in some of their most desirable buildings. Others are holding the line.
“With all the market uncertainty, there may be a ‘let’s meet the market’ mentality by landlords,” said Scott Rechler, chief executive officer of RXR Realty LLC, which is keeping rents steady in the nine Midtown skyscrapers it controls. “Whereas last year, it was ‘let’s move the market, let’s lead the market.’”
Midtown landlords, accustomed to having the upper hand in leases in the largest and costliest U.S. office market, face the prospect of a slowdown in demand amid the stock-market slide, added competition from new skyscrapers, and a sense that the pace of job growth can’t keep up. With cost-conscious employers packing more workers into tighter quarters, it’s time for building owners to lower their sights a bit, said Heidi Learner, chief economist at brokerage Savills Studley Inc.
“We’re now in year seven of a recovery, and by my calculations, we’ve added some 150,000 office workers” in the city, she said...Midtown Manhattan Office Landlords Losing Power to Drive Rents
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