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|Face rents will continue to decline through the second half, but at a more moderate pace, and there will be a smaller gap between asking and taking rents, Studley research and analytic gurus Keith DeCoster and Steve Coutts told us when we visited their new 399 Park Ave. office recently. As the year progresses, some buildings will start to see a pullback on concessions—and we may even see rents begin to trend upwards in submarkets like the Plaza District and at select Park Avenue properties. The Plaza District stands out as the one submarket with strong demand and sustained net absorption over the last several months.|
|Concession increases have driven down net rents in Downtown and Midtown. In fact, Midtown saw one of the most significant drops in net effective rents among the Top 20 office markets last year, down nearly 49% to $33.95/SF, according to the Studley Effective Rent Index review. (Downtown was down 39%, to $21.26/SF.) Free rent—up to 18 months on long-term deals—and TI's that reached as high as $85/SF in Midtown and $55-$60/SF Downtown contributed to the decline. Outlook: Expect further adjustment Downtown as businesses remain cautious and several million SF hit the market this year. Meanwhile, Midtown should see increased fluidity, as landlords lure tenants away from existing locations with generous build-out packages and incentives.|