Class A Effective Rents* Drop 7.10%in Q3; Overall Effective RentsIncrease by 1.23%
Pre-election jitters combined with economic uncertaintyresulted in a meaningful 7.1 percent decrease in Class Aeffective rents in the third quarter of 2012. The averageClass A effective rent in Manhattan was $58.42 in Q3. Thisnumber represents a 2.5 percent increase over the average2011 Class A rents in Manhattan, but is a significant dropfrom Q2 Average effective rents of $62.88 per square foot.However, as has been seen throughout the past year, theTechnology, Media, and Advertising sector bolstered theManhattan market with continued effective rent increasesin Midtown South and an overall increase in Class B takingrents of 6.83 percent, to an average of $40.12 per squarefoot. On the whole, the Manhattan office marketexperienced another quarter of growth with effective rentincreasing by an average of 1.23 percent quarter overquarter, reaching $49.64 per square foot.
Midtown South Sees anotherQuarter of Increases in Rents,Decreases in Concessions
Since Q2 the average effective rent in Midtown Southincreased 6.68% to $47.98 PSF. This is the sixth consecutivequarter of growth in effective rent for the Midtown South,a market driven by rapidly growing tenants in Technology,Media and Advertising. Additionally, the average free rentconcession package decreased from four months to threein the past year, and tenant improvement allowancesdecreased from the high teens per square foot to the lowteens in the last three quarters.The combination of escalating rents and decreasingconcessions signals that landlords are in an increasinglystrong position when negotiating rents with tenants. Ashas been seen throughout the past year, Midtown Southshowed the strongest market growth in the third quarter.
THE EFFECTIVE RENT REPORT
Manhattan Office Market 2012 Q3
Manhattan Office Effective Rent Trend
556065Class A Class B Overall
Midtown South Office Effective Rent, Free Months and TI
freeMonths effectiveRate ti
November 5, 2012