Two new Manhattan commercial leasing reports (see complete reports below) covering August indicate there is some stability in the office market. But it will likely be a temporary reprieve, one expert said.
The Class A office vacancy rate fell 0.2 points in August to 11.8 percent while average asking rents rose 19 cents to $64.36 per square foot, commercial services firm Colliers ABR reported today.
The amount of direct and sublet availabilities (see chart above), which determines the vacancy rate, fell by about 100,000 square feet to 58.8 million square feet between July and August.
In Manhattan overall, for all building classes, the vacancy rate remained unchanged at 13.2 percent, with average asking rents falling 24 cents to $51.71.
The month’s uptick in rents and decline in vacancy rates in some classes of office property will be temporary, Colliers ABR researcher and managing director Robert Sammons said.
“We see several major blocks that will add to availability and that will continue to put pressure on landlords and sublandlords,” he said, through the first quarter of 2010. He estimated rents would drop another 10 percent by that time.
CB Richard Ellis reported yesterday that leasing activity fell 19 percent last month to 1.8 million square feet, but August was the third month in a row with leasing above 1 million square feet. For the first five months of the year leasing activity did not break the 1 million square foot level.
Average asking rents in Manhattan, according to CBRE data, fell $1.15 to $51.28 per square foot.
In a report released Tuesday, Cushman & Wakefield data showed a larger decline in leasing volume, down to just 1 million square feet leased. Experts said the difference was likely due to different statistical methods used to track the data.