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City Sees Lowest Amount of Office Space Rented in 7 Years, Study Shows

By Amy Zimmer | January 13, 2017 5:42pm | Updated on January 16, 2017 2:48pm
 A rendering of Hudson Yards, where many firms are relocating.
A rendering of Hudson Yards, where many firms are relocating.
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The city’s real estate market for office buildings took a hit in 2106, seeing the lowest amount of office space leased in seven years, according to an analysis JLL released Friday.

The agency attributed the decline to political and economic uncertainty, combined with declining employment growth.

Tenants signed leases for roughly 28.14 million square feet of space in 2016, the firm said. It was the smallest amount of office space leased since 2009, when there were transactions for 24.37 million square feet of space.  

“Leasing activity should increase in the early part of 2017, as several large transactions are anticipated to close,” Tristan Ashby, vice president and director of JLL's New York office, said in a statement.

In Midtown, Major League Baseball took 400,000 square feet at 1271 Avenue of the Americas for its move from 245 Park Ave. and the Chelsea Market; the National Basketball Association signed an early renewal of 175,000 square feet at 645 Fifth Ave.; and the National Hockey League is leasing 160,000 square feet at 1 Manhattan West as it relocates to Hudson Yards from 1185 Avenue of the Americas.

In the Midtown South market, the largest transaction of the year was the New York City Human Resources Administration’s renewal for 264,358 square feet at 109 E. 16th St.

Downtown’s largest deal was a 256,000-square-foot renewal lease for the New York State Department of Health at 90 Church St.

But these and other new transactions might not put a dent in vacancy rates, which rose to 10.4 percent in the fourth quarter of 2016, up from 9.6 percent the same time in the previous year.

“Even with the greater volume expected early [2017], vacancy rates could remain flat or increase further,” Ashby said. “Any boost in deal volume will likely be offset by additional blocks of newly delivered space and returned space being added to the inventory.”

With the slowdown in leasing activity, came a dip in asking rents in the fourth quarter of 2016 compared to the quarter before.  

Overall asking rents fell to $70.22 per square foot, down from $71.25 the quarter before.

But compared to the same time the year before, rents were actually up. Asking rents in the fourth quarter of 2015 were $68.73 a foot, JLL found.