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$66.38: As tenants continue to compete for an

ever-shrinking inventory of space in Midtown
South, average rents continue to skyrocket. In
the third quarter of 2012, average rent for Class
A buildings in Midtown South rose by a whopping
With all the talk about Midtown Souths incredibly shrinking vacancy rate, its easy to conclude
16.6 percent to $66.38, not only the priciest the
submarket has ever commanded, but also the
that deals by a swarm of new-media companies, social applications and tech startups are at
closest those rates have come to Midtown prices.
the heart of the markets heralded rebound. But a closer look at third quarter leasing activity
Thats a huge jumpfar and away the biggest of
suggests that companies with long histories, like Este Lauder, should take equal billing. Ken
any market, said Mr. McCarthy. Just to give you
McCarthy, senior economist at Cushman & Wakefield, reviewed Midtown Souths third-quarter
a sense of it, a year ago the difference between
activity and explained why the market and its five submarkets performed so well in the last
Midtown Class A and Midtown South Class A was
MIDTOWN SOUTH NEW YORK OFFICE MARKET
- THIRD
$12.81. Now
its $5.38. QUARTER
quarter and in the past 12 months.

1,155,210: Leases by New York University,

Este Lauder and Express helped prop
year-to-date leasing activity among
Class B buildings in the Madison/Union
Square submarket far above neighboring
submarkets in Midtown South. Thats a
big part of the reason we saw such high
levels of leasing.

2012

MIDTOWN SOUTH NEW YORK OFFICE MARKET

Class A Statistical Summary
Number of
Buildings

Submarket

Inventory

Total
Available
Space

Thi
Y-o-Y
% Change

Direct
Available
Space

Sublease
Available
Space

Direct
Vacancy
Rate

Sublease
Vacancy
Rate

Total
Vacancy
Rate

Y-o-Y
% Pt. Change

Direct
Wtd. Avg.
Rental Rate

Sublease
Wtd. Avg.
Rental Rate

Total
Wtd. Avg.
Rental Rate

Y-o-Y
% Change

Year-to-Date
Leasing
Activity

Y-o-Y
% Change

Year-to-Date
Direct Absorption
Rate

SoHo

N/A

0.0%

0.0%

0.0%

N/A

$0.00

$0.00

$0.00

N/A

N/A

Greenwich/NoHo

120,000

N/A

0.0%

0.0%

0.0%

N/A

$0.00

$0.00

$0.00

N/A

N/A

Madison/Union Square

17

9,372,050

368,732

49.5%

286,122

82,610

3.1%

0.9%

3.9%

1.1%

$66.07

$39.07

$57.19

18.3%

210,863

-28.9%

(53,939)

Hudson Sq./W. Village

2,102,656

260,416

185.6%

260,416

12.4%

0.0%

12.4%

8.7%

$72.91

$0.00

$72.91

-7.5%

224,612

-33.4%

188,250

Chelsea

2,788,000

N/A

0.0%

0.0%

0.0%

0.0%

$0.00

$0.00

$0.00

N/A

63,285

334.9%

Totals

27

14,382,706

629,148

86.2%

546,538

82,610

3.8%

0.6%

4.4%

2.0%

$70.70

$39.07

$66.38

16.6%

498,760

-23.1%

134,311

Y-o-Y
% Change

Direct
Available
Space

Sublease
Available
Space

Direct
Vacancy
Rate

Sublease
Vacancy
Rate

Total
Vacancy
Rate

Y-o-Y
% Pt. Change

Direct
Wtd. Avg.
Rental Rate

Sublease
Wtd. Avg.
Rental Rate

Total
Wtd. Avg.
Rental Rate

Y-o-Y
% Change

Year-to-Date
Leasing
Activity

Y-o-Y
% Change

Year-to-Date
Direct Absorption
Rate

MIDTOWN SOUTH NEW YORK OFFICE MARKET

Class B Statistical Summary
Total
Available
Space

Thi

Number of
Buildings

Inventory

SoHo

11

1,113,748

18,205

9.8%

16,593

1,612

1.5%

0.1%

1.6%

0.1%

$58.57

$0.00

$58.57

28.4%

31,244

-34.2%

3,630

Greenwich/NoHo

17

3,028,448

306,058

128.1%

135,133

170,925

4.5%

5.6%

10.1%

5.7%

$60.30

$0.00

$60.30

-1.4%

57,543

-18.6%

(98,682)

Submarket

Madison/Union Square

125

16,210,488

1,057,143

-14.9%

857,899

199,244

5.3%

1.2%

6.5%

-0.8%

$46.56

$46.43

$46.55

2.4%

1,155,210

18.3%

320,681

Hudson Sq./W. Village

11

3,348,220

286,648

137.3%

209,135

77,513

6.2%

2.3%

8.6%

5.0%

$55.29

$61.62

$56.80

40.7%

208,242

-27.3%

(59,245)

Chelsea

21

5,674,398

288,553

46.3%

249,876

38,677

4.4%

0.7%

5.1%

1.6%

$46.45

$41.08

$46.09

24.3%

275,238

8.6%

(6,086)

Totals

185

29,375,302

1,956,607

14.3%

1,468,636

487,971

5.0%

1.7%

6.7%

1.0%

$49.31

$50.66

$49.50

9.3%

1,727,477

5.7%

160,298

Y-o-Y
% Change

Direct
Available
Space

Sublease
Available
Space

Direct
Vacancy
Rate

Sublease
Vacancy
Rate

Total
Vacancy
Rate

Y-o-Y
% Pt. Change

Direct
Wtd. Avg.
Rental Rate

Sublease
Wtd. Avg.
Rental Rate

Total
Wtd. Avg.
Rental Rate

Y-o-Y
% Change

Year-to-Date
Leasing
Activity

Y-o-Y
% Change

Year-to-Date
Direct Absorption
Rate

MIDTOWN SOUTH NEW YORK OFFICE MARKET

Class C Statistical Summary
Number of
Buildings

Submarket

Inventory

Total
Available
Space

Thi

SoHo

36

2,972,906

108,316

-31.8%

90,302

18,014

3.0%

0.6%

3.6%

-2.0%

$46.09

$54.97

$47.56

0.6%

207,949

123.7%

(7,299)

Greenwich/NoHo

18

1,429,050

201,155

-13.7%

201,155

14.1%

0.0%

14.1%

-2.2%

$39.60

$0.00

$39.60

8.3%

64,257

2.5%

28,602
63,899

Madison/Union Square

79

5,609,860

147,137

-24.4%

131,777

15,360

2.3%

0.3%

2.6%

-0.9%

$36.73

$0.00

$36.73

13.1%

194,542

-47.8%

Hudson Sq./W. Village

23

4,803,110

931,416

12.6%

891,784

39,632

18.6%

0.8%

19.4%

2.2%

$45.14

$65.00

$45.47

4.9%

239,596

24.9%

(2,161)

Chelsea

60

6,552,081

300,290

-42.6%

291,946

8,344

4.5%

0.1%

4.6%

-3.5%

$44.85

$34.74

$44.38

2.6%

185,160

-38.5%

(9,245)

Totals

216

21,367,007

1,688,314

-12.8%

1,606,964

81,350

7.5%

0.4%

7.9%

-1.3%

$43.67

$54.58

$43.96

6.0%

891,504

-12.7%

73,796

Total
Available
Space

Y-o-Y
% Change

Direct
Available
Space

Sublease
Available
Space

Direct
Vacancy
Rate

Sublease
Vacancy
Rate

Total
Vacancy
Rate

Y-o-Y
% Pt. Change

Direct
Wtd. Avg.
Rental Rate

Sublease
Wtd. Avg.
Rental Rate

Total
Wtd. Avg.
Rental Rate

Y-o-Y
% Change

Year-to-Date
Leasing
Activity

Y-o-Y
% Change

Year-to-Date
Direct Absorption
Rate

MIDTOWN SOUTH NEW YORK OFFICE MARKET

Overall Statistical Summary
Number of
Buildings

Submarket

Inventory

Thi

SoHo

47

4,086,654

126,521

-27.8%

106,895

19,626

2.6%

0.5%

3.1%

-1.3%

$48.02

$54.97

$49.03

4.3%

239,193

70.4%

(3,669)

Greenwich/Noho

36

4,577,498

507,213

38.1%

336,288

170,925

7.3%

3.7%

11.1%

3.1%

$47.48

$0.00

$47.48

5.0%

121,800

-8.7%

(70,080)

Madison/Union Square

221

31,192,398

1,573,012

-6.6%

1,275,798

297,214

4.1%

1.0%

5.0%

-0.3%

$47.54

$44.22

$47.02

5.6%

1,560,615

-5.2%

330,641

Hudson Sq./W. Village

41

10,253,986

1,478,480

42.3%

1,361,335

117,145

13.3%

1.1%

14.4%

4.6%

$51.81

$62.26

$52.40

13.6%

672,450

-17.6%

126,844

Chelsea

83

15,014,479

588,843

-18.3%

541,822

47,021

3.6%

0.3%

3.9%

-0.9%

$45.74

$38.89

$45.34

11.7%

523,683

-8.0%

(15,331)

Totals

428

65,125,015

4,274,069

7.2%

3,622,138

651,931

5.6%

1.0%

6.6%

0.5%

$49.13

$49.05

$49.12

10.0%

3,117,741

-5.6%

368,405

6.6%: The total vacancy rate for Midtown South,

27: Quite the opposite of Class B space in
among the tightest markets in the country,
Midtown South, Class A space suffers from
jumped from 6.1 percent in June, the largest jump
a microscopic inventory of 14.4 million
in recent memory. The change can be attributed
square feet in just 27 buildings. You could
to a few large blocks of space coming to market.
imagine a situation where rents continue
In Hudson Square, we had 350 Hudson Street
to rise in the Class A market, especially
NOTE: Only space that can be occupied within six months from the end of the current month is included in statistics.
come to market, so the Hudson Square market
given the vacancy rate, said Mr. McCarthy.
in particular saw a jump in vacancy, said Mr.
But
I doubt
that Research
theyllServices
ever get as high
Source:
Cushman
and Wakefield
McCarthy, who added that space also came
as Midtown. But you never know; it could
available in the Madison/Union Square market,
happen.
specifically at 110 Fifth Avenue.

18|October 16, 2012|The Commercial Observer

4.6%: In the Hudson Square/West Village

submarket, the total vacancy rate shot up
to 14.4 percent from just under 10 percent
a year ago, thanks to 350 Hudson Street,
where nearly 100,000 square feet of space
came to market, and at 101 Avenue of the
Americas, where union 32BJ vacated the
entire building in order to relocate to 620
Avenue of the Americas.

1,727,477: Among Class B assets, leasing

increased by 5.7 percent since last year,
which is doubly impressive when you
consider that, with overall year-to-date
leasing activity clocking in at a healthy 3.1
million square feet, the 1.7 million square feet
of Class B office space that changed hands
over the past year represents nearly more
than half of Midtown Souths total inventory.
Its definitely the most active segment class
of space in the market, said Mr. McCarthy.