The Real Deal New York

Midtown vacancy rate at 15-year high: Colliers


November 10, 2009 09:50AM
By Adam Pincus


Richard Bernstein, vice chairman at Colliers ABR

The vacancy rate for Midtown office buildings hit its highest level in
more than 15 years last month, fueled in part by several large blocks
of space that were placed on the market, a new report released
yesterday by commercial services firm Colliers ABR shows.

But overall Manhattan data was mixed, showing some strength in the
Midtown South market where the vacancy rate declined modestly and
prices rose for Class A office space, the report indicates.

The Midtown vacancy figure reached 14 percent, its highest level since
March 1994 when the rate reached 14.1 percent, the report covering
October says. Asking rents also fared poorly in the district, falling
1.2 percent to $58.16 per square foot.

In a positive sign, the vacancy rate for all classes of buildings in
Midtown South fell .1 points to 14.1 percent and the average price for
Class A office space rose by $1.36 per square foot to $50.88 per foot.
But for all classes of buildings in the district, the average asking
rent fell by $0.48 per foot to $39.88 per square foot.

Downtown, the market was mostly stable. The vacancy rate rose .2
points to 11 percent and the average asking rent fell by $0.15 per
foot to $39.95 per square foot, the data reveals.

The overall negative trend was expected to continue, although the
steep price declines experienced earlier this year were thought to be
over, said Richard Bernstein, vice chairman of Colliers ABR.

He predicted the vacancy rate would rise another 2 percent or 3
percent in the coming year, as additional sublease space was added to
the market.

“If we look at what is underlying the data, there is still very little
or no sign of organic growth” that would turn the market around now,
Bernstein said.

The three major blocks that contributed to the list of available space
were in the Plaza District, Grand Central and Penn Plaza/Garment
District, for a total of about 486,000 square feet, Colliers reported.
The average asking rent for Class A buildings in the three Manhattan markets fell $0.78 to $63.12 and the vacancy rate rose by .1 points to 12.1 percent, the Colliers report says.

Last Friday, a Manhattan report released by commercial services firm
CB Richard Ellis pointed to a weaker leasing market in October as
well.


Source: Colliers ABR

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