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New York financial sector growth

Wolves of Wall Street howl for office space

New York City \ Broadway and Wall Street
"Wall Street & Broadway" by massmatt is licensed under CC BY NC-SA 2.0

Manhattan’s office leasing activity got off to a sleepy start in 2015, but the island giant is showing signs of awakening. The latest numbers show both leasing activity and asking rents on the rise—thanks largely to a Wall Street growth spurt.

As The Wall Street Journal reports, New York’s financial-services sector added 3,600 jobs in January and February, according to statistics from the New York State Department of Labor. The finance and insurance sub-sector accounted for 2,800 of those new jobs, a significant increase over the 1,000 new jobs it would typically add during that time frame.

“The Manhattan office market’s post-Global Financial Crisis recovery has led the nation, and has largely been achieved without participation from financial services. So the employment trends from this sector bode well for near-term demand.”

John Wheeler, Managing Director at JLL

Historically, finance tenants have been the biggest driver for the city’s Class A office space, and JLL research shows Manhattan’s Class A vacancy rate at a tight 11.1 percent. Additionally, the average asking rent for Class A properties stands at $73.95, 30.6 percent higher than Class B office space.

“The Manhattan office market’s post-Global Financial Crisis recovery has led the nation, and has largely been achieved without participation from financial services,” says John Wheeler, Managing Director at JLL. “So the employment trends from this sector bode well for near-term demand.”

Last year’s leasing activity in Downtown Manhattan was driven by the growing influence of technology, advertising, media and information (TAMI) tenants. However, the financial and legal services sector still claim the majority of the top 10 leases in Midtown. That seems to be carrying into 2015, as the early months of this year have seen three significant blocks of leasing activity in Midtown, including more than 200,000 square feet from investment management firm Fortress Investment Group.

Through January and February, the average asking rent in Midtown hit $77.85, behind only Midtown South. JLL anticipates additional large-block availability in Midtown this year and that the improving outlook for finance jobs will continue to hold office vacancies low and rents high in that submarket.