Despite the general narrative of rising costs, parts of Manhattan are actually becoming more affordable for commercial tenants. Our Lease Value Index™ has identified four specific corridors where asking rents have dropped by 10% or more year-over-year.
The most significant decline is in a pocket of Midtown East, traditionally dominated by older B-class office stock. As tenants migrate to trophy space in Hudson Yards or the new Grand Central hubs, these older buildings are being forced to reset their expectations.
The Retail Vitality Score™ in these corridors is also under pressure, but the lower rents are starting to attract a new wave of "creative industrial" and hobby-based businesses that were previously priced out of the borough.
We are seeing a Context Profile™ shift in these areas. What was once "Corporate Core" is now showing signs of "Adaptive Reuse Potential." For opportunistic tenants, these 10%+ declines represent a rare window to secure Manhattan frontage at 2017 prices.