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MARKET OVERVIEW

Midtown Office Market After reaching a cycle high of $79.91 psf in September 2016, Midtown asking rents decreased 5.8%, closing out April at $75.24. Class A asking rents dropped 3.9% to $81.83 psf. The downward pressure on asking rents over the past two years was caused by the influx of sublease supply on the market, jumping 56.8% since year-end 2016. Sixth Avenue/Rock Center The Sixth Avenue/Rock Center submarket defied the odds since 2013, when market experts were predicting a potential vacancy rate in the range of 15 to 175%, as major corporations were expected to vacate the area. However, this corridor remained in high demand, as vacancy peaked at 14.1% in August of 2013, but steadily declined to a current level of 7.9% in April—the second lowest submarket rate in Midtown. The recent sustained low vacancy was led by steady leasing demand with 4.6 msf leased since the start of 2018. Despite a tight vacancy rate, almost 2.0 msf will be available between fourth quarter 2019 and 2022—led by Bank of America vacating 50 Rockefeller Plaza, Barclays’ lease expiration at 1301 Avenue of the Americas, Scripps merging with Discovery and consolidating in Midtown South, and the NHL and Accenture moving to Manhattan West from Avenue of the Americas. In 2024, almost 1.0 msf will be available at 1345 Avenue of the Americas as the Alliance Bernstein lease rolls and the relocate to Hudson Yards. Class A asking rents along Sixth Avenue are currently $81.61 psf, a year-over-year decline of 4.8%, due to lower-priced space becoming available in the base of several buildings located along the lower part of the submarket and the 29th-31st floors at 1325 Avenue of the Americas. Though asking rents have dropped, starting deal terms have increased. Leases signed during 2018 and 2019 averaged starting rents of $86.13 psf with 13 months free and $85.87 psf in tenant improvement allowance. While starting rents increased 6.8% from 2017, net effective rents on Sixth Avenue decreased 1.1% during this time.

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