February proved to be a strong month for the Manhattan office market. Colliers ABR reports that Class A vacancy fell to 9.4%, or its lowest since April 2002. Tenants renewing and expanding well ahead of lease expirations helped drive the performance.
Average asking rents have flattened out over the past few months: Class A rents fell two cents to $47.92 per sq. ft. from $47.94 at the end of January. However, Colliers doubts that these rents will hold steady for much longer as prime space continues to be absorbed.
In midtown Manhattan, law firms continued to drive leasing demand. Arnold & Porter, for example, signed a 105,000 sq. ft. office lease at 399 Park Avenue in February. Financial services firms also chipped in as Citigroup leased 176,000 sq. ft. at 731 Lexington Avenue.
This activity helped push average Class A asking rents up from $57.10 per sq. ft. to $57.15 per sq. ft. between the end of January and February.
The largest leasing deal of the month was signed in lower Manhattan, where law firm Fried Frank Harris Shriver & Jacobson renewed and expanded for 380,000 sq. ft. at One New York Plaza. Lower Manhattan's Class A vacancy rate improved to 13.2% from 13.4% in January while the average asking rent fell one dime to $33.56 per sq. ft.