April 5, 2017

To attract tenants — without cutting their rents too deeply — Manhattan office landlords are offering their tenants larger allowances for improvements (TI allowances). The average grew 4% in 2016, to reach $78 per square foot at the end of the year.

That’s especially true in several submarkets in Midtown, where owners of office properties have struggled to fill the growing amount of available space in the last 12 months. The percentage of vacant space is at or above 13.5% in submarkets like Fifth/Madison, Grand Central, the Plaza District and Time Square South.

“This may embolden tenants in certain segments of the market to seek still more concessions, anticipating that landlords will be willing to agree to larger TI allowances in order to avoid prolonged downtime on vacant space,” according to CBRE’s Manhattan MarketFlash for March 2017

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