Last week, the statistic was all about sublet availability and its recent improvement. This week we turn to direct availability, or the space marketed directly by the landlord of building.
Sublet space tends to be thought of as the “sexier” topic, likely due to the fact that it is space directly marketed by a tenant (possibly in trouble and needing to dump space on the market) and because that sublet space can be highly discounted and skew the asking rent of a market lower. That said, direct availability currently does make up a whopping 81.4 percent of all space on the market in Manhattan. And like sublet availability, it has also been falling, though not quite at such a rapid pace.
In January, there was 38,791,855 square feet of direct availability (all classes) in Manhattan—its lowest figure since March 2009. During the recent downturn, it had climbed as high as 45,630,157 square feet (March 2010). However, Manhattan is still a bit above its 21st-century monthly average of 34,568,485 square feet.
Drilling down into the three major submarkets, all have generally been trending lower over the past year with midtown south most improved. And over the same period of time, the drop in Class A direct availability has outpaced both Class B and Class C, though those segments have improved as well.
Looking ahead, the biggest concern in the near term is that some large financial services tenants will choose not to renew for at least some of their occupancy in midtown (especially in the Grand Central, midtown west and Times Square submarkets).
A bit further out, in 2013, look for additional direct availability downtown in both the World Trade and Financial submarkets (though now being marketed, the well publicized big direct blocks upcoming at the World Financial Center and the World Trade Center are not included in current availability numbers).
Robert Sammons, Cassidy Turley