The “Avenue of the Americas” is sliding towards the “Avenue of Availability,” according to a study released by Savills Studley last month.
The research suggests that the commercial rental market along the prime Midtown Corridor may soon begin to tip in the tenants’ favor despite a current lack of competitive pricing and available space.
“Sixth Avenue rents seem to have some room to decline relative to rents in other parts of Midtown,” said executive managing director of Savills Studley, Greg Taubin. “In addition, the supply of space that has already been committed to being vacated in the next few years could further impact the Corridor, but time will tell.”
Currently, the area’s meager sublet reservoir places owners in the position of strength.
“Asking rent has been boosted by the change in composition of inventory,” Savills Studley’s chief economist, Heidi Learner told Real Estate Weekly.
Sublet space along Sixth Avenue currently makes up only 19 percent of the available supply as compared to the 45 percent it did in the summer of 2011.
The 36 percent drop leaves Sixth Avenue on the sidelines while other divisions of Midtown are still able to cater to large commercial tenants who desire the discounted rates of sublets in the neighborhood of 100,000 s/f.
Sixth Avenue’s Class A selection does not provide relief and is described in the study as already “somewhat stale.” Spaces from this category have been waiting on the market for nearly a year and a half.Sixth Avenue braces for cheaper rents
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New York City Office Sector Report (Q2 2014)