$118.65 a square foot.
That’s the new benchmark for Manhattan office rents.
Five years ago, even in Manhattan’s most expensive office towers, those kinds of rents would have seemed unimaginably high; 10 years ago, it would have been scandalous.
The brokerage Cushman & Wakefield averaged the per-foot asking rents of 27 prime midtown office buildings to come up with the magic number, and it’s far higher than most might have predicted.
The average asking rent borough-wide was $43.20 a square foot in the first quarter of 2006, according to Cushman & Wakefield. Within a year, that average had jumped 23 percent to more than $53 a foot. In midtown, the year-over-year increase in average asking rents was even starker, at 26 percent, to $62.89 a foot.
That seems startling, but a lot of leases are being signed with rents at more than twice that.
In the first quarter of 2007, more leases were inked in Manhattan for at least $125 a foot than were inked for between $100 and $124.99 a foot. (And these are taking rents on signed leases, not asking rents from landlords.)
And 2006 saw the greatest annual share of such $125-and-up leases in Manhattan history.
The majority of office leases here still do involve rents of less than $100 a foot, but more and more buildings are meeting the new benchmark.
Take 152 West 57th Street. Dubbed the Carnegie Hall Tower, it was built by the Rockrose Development Corp. in the early 1990’s, in the middle of an office-market recession (and, according to The New York Times, against the advice of fellow real-estate pros).
But no matter: The 60-story tower is up there now as an income earner with landmark office towers like the G.M. Building at 767 Fifth Avenue and the Seagram Building at 375 Park Avenue.
It’s also up there with One Bryant Park, one of only two new class-A office towers opening in Manhattan in the next several months. (The new New York Times headquarters, developed by Forest City Ratner, is the other.)
One Bryant Park, developed jointly by the Durst Organization and Bank of America, epitomizes the new benchmark in Manhattan rents: Its space has routinely leased for at least $100 a foot, and its tenant roster reads like the Fortune 500.
Its primary tenant, of course, is the financial-services giant Bank of America, which will take more than three-fourths of the 2.1-million-square-foot tower; but there’s also the hedge fund Marathon Asset Management, which will take 75,000 square feet, and the corporate law firm Akin, Gump, Strauss, Hauer & Feld, which will lease over 200,000 feet.
These are the new masters of the office-market universe, the tenants who look unshocked at a $118.65-per-square-foot sticker price.