What a Dollar Can Get You
Class-A office rents spiked $1 in Q1, says PMRG SVP/director of research Ariel Guerrero. That brings us to $33.71/SF citywide, and Ariel tells us it’s the largest quarterly hike in rents we’ve seen since 2007. (And you thought a dollar wasn't even enough to get you a soda from the machine.) He attributes it to occupancy rates remaining over 90%, the delivery of new product, and increased taxes inflating operating expenses. He anticipates that Class-A rents will rise 8% to 10% citywide as quality space options remain limited. But relief is on the way for tenants as 3.9M SF delivers by year-end.
Greenspoint, in particular, blew us away with its 38% year-over-year increase, skyrocketing from $23.61 in Q1 ’13 to $32.58 in Q1 ’14. Ariel says that’s largely attributed to the future Exxon-Mobil space availabilities in Greenspoint Place (pictured), which will undergo a comprehensive repositioning. Since those blocks—totaling 1.3M SF—are coming available for the first time in many years (the space has historically been over 95% leased), rents have shot up. Exxon will vacate 620k SF this year and continue rolling out of Greenspoint next year. Other markets with staggering increases: Galleria (14.7% growth to $35.28) and Greenway Plaza (12.6% to $34.46).