Another Troubling Report on the Manhattan Office Market
- Mar 31, 2009
News of the Manhattan office market’s poor performance continues to roll in as FirstService Williams releases its first quarter 2009 report. The dismal numbers, the real estate services firm concludes, come as no surprise given New York City’s–and the country’s–economic downslide. What a difference a couple of years make. During the first quarter of 2007, the average vacancy rate in Manhattan was just 7.7 percent; now it’s well into the double-digits at 12 percent, having jumped substantially from 10.9 percent just three months ago at the close of 2008. Net absorption figures, a negative 3.9 million square feet, serve as further evidence that even Manhattan’s once high-flying office market is taking a beating in this most inhospitable economic climate. Even rental prices are on a downward swing. The average asking rent in Manhattan plummeted almost $10 in one quarter, going from $74.49 in the fourth quarter of 2008 to $65.18 in the first quarter of 2009. According to FirstService Williams, the drastic decline is simply a reality check; there are no longer any illusions about demand. The news comes as little surprise. As noted in FirstService Williams’ report, much of the city’s sizeable pool of financial institutions, the major space users, previously revealed plans to decrease the size of staff and reduce the amount of space utilized per employee. Some submarkets, however, are feeling the pinch more than others. The vacancy rate in Midtown North reached 13.3 percent in the first quarter, compared to Midtown South, which managed to stay out of the double-digit range at 9.8 percent. Downtown escaped the teens with a 10.8 percent vacancy rate, but with more finance companies gearing up to release excess space, that number is only going to get higher this year, as per the report.