The Real Deal: New lease deals dominate Manhattan office market in 2014

By Mark Maurer on January 14, 2015.

It may not be out with the old, but it’s certainly in with the new. Throughout Manhattan, new leases comprised a larger chunk of all office deals in 2014, rising to 63 percent from 55 percent year-over-year based on square footage leased. That’s according to CompStak’s latest rent report, provided exclusively to The Real Deal.

The high-profile new leases included Sony’s 525,000-square-foot deal at the Sapir Organization and CIM Group’s 11 Madison Avenue, and law firm White & Case’s deal for 440,000 square feet at the Rockefeller Group’s McGraw-Hill Building.

Companies in the technology, advertising, media and information sectors, collectively known as TAMI tenants, continued to have a big impact. Their presence was felt particularly in Downtown, where they occupied a record 43 percent of all the area’s office space in 2014, according to CompStak.

TAMI tenants continued to head Downtown to find relatively affordable Class A office space, including Time Inc., which took 700,000 square feet at Brookfield Place. Downtown Class A effective rents averaged $41 per square foot in 2014, according to CompStak. Meanwhile, Class B effective rents in the submarket were a little more than $35 per square foot.

The effective rent for Class B buildings in Midtown climbed to $49 per square foot from $44.5 per square foot year-over-year. Midtown South’s Class B effective rents also grew – to $52 per square foot from $47.8 per square foot in 2013.

“The high Midtown South Class B rents drove tenants to other markets with a large class B inventory such as Penn Station and Times Square,” the report stated. “This is a 2014 trend, not just a fourth-quarter trend.”