CompStak's Q3 2014 Effective Rent Report for Manhattan finds that the number of top tier Midtown transactions decreased this quarter. Vibrant class A leasing activity in Midtown South held Manhattan average effective rent at $56.70 PSF, virtually the same as last quarter. The class B sector recorded strong performance this quarter following four consecutive quarters of growth. Average class B effective rents have increased over 10% compared to Q3 of last year.
Midtown and Downtoan Class A Slow, Class B Trending Up
- Fewer high end Midtown class A transactions this quarter
- An increase in Midtown class B leasing activity
- Downtown: disparity between WTC Effective Rents in the low $50s and the Financial District's mid $30s
Spotlight: Midtown South Getting Pricey
Midtown South leasing has shown the largest rental growth of any Manhattan market over the past few years. The 19% growth in effective rent since the Q3 of last year can be explained by a combination of factors including pricey expansions in Chelsea, an ongoing demand for creative space, and the opening of new high-end buildings, enticing tenants to pay upwards of $100 PSF in starting rent. Area wise, Midtown South leases now account for 26% of the priciest office leases in Q3.