Office Tenants Skim the Cream
August 13, 2010
By: Paul Bubny

To get a clear indication of the “flight to quality” principle in action when it comes to Manhattan office leasing, consider the Plaza District, where total available class A space has declined 18.6% since the start of the year. “The market is separating into two tiers as tenants winnow out the gems and the big blocks of space, leaving behind a hodgepodge of spaces of varying quality,” according to tenant-rep firm Studley in its second-quarter report on the market. ...

...Ninety percent of the leases signed during the past several quarters came with initial asking rents of $40 to $75 per foot, according to Studley’s Manhattan report. “The $100 asking rent is making a comeback in a few of Midtown’s trophy properties but is a distant memory for most buildings,” the report states....

... Helping drive both that greater diversity and the high volume of leasing here has been Manhattan’s rebound from the downturn. With 19.2% of the office-using jobs lost during the Great Recession now restored, it’s well above the national average of 7.3%. However, Studley cautions that “recent turbulence in the global and domestic economy” could hamper job growth for the balance of 2010.

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