Downtown vacancy rate tops Midtown for first time since 2008

Downtown office vacancy chart, click image for larger version (source: Cassidy Turley)

The vacancy rate for Downtown surpassed the vacancy rate for Midtown
for the first time in nearly two years as several large blocks of
space were returned to the market in Lower Manhattan, data from
commercial services firm Cassidy Turley showed.

The vacancy rate for Downtown was 13.5 percent in July, compared to a
rate of 12.8 percent for Midtown. The month earlier Midtown had a
higher rate.

The last time the Downtown rate was higher was in November 2008, when
it had a vacancy rate of 10.1 percent while Midtown had a rate of 9.7
percent, figures from Cassidy Turley showed.

Robert Sammons, director of research for Cassidy Turley, said it was
the historical norm for Downtown to have a higher vacancy rate.

“Over the past 25 years or so [the current downturn] is probably only
the second time that the Downtown vacancy rate has been lower,” he
said. “In this period Midtown went into recession first because of all
the financial services firms [located there].”

The last time Downtown had a lower rate was in the late 1990s when new
media and high tech firms were flocking to the area, drawn in part by
financial incentives. Another factor driving down the vacancy rate in
Lower Manhattan was the conversion of 15 million square feet of office
space to residential use, Sammons said.

In June the vacancy rate for Midtown was 12.8 percent, while Downtown
it was 12.4 percent.

In addition, the vacancy rate for Class A buildings Downtown hit its highest level in more than five years, reaching 12.4 percent. The last time it was higher was in March 2005 when it was 12.7 percent, Cassidy Turley reported.

The vacancy rate in Midtown tightened with leases such as CBS
Broadcasting inking a renewal deal at 555 West 57th Street and the
National Football League signing a relocation deal for 173,000 square
feet at 345 Park Avenue, Cassidy Turley said.

The vacancy rate for Midtown South in July was 13.2 percent, down from
13.5 percent the month earlier, Cassidy Turley reported.

Overall the vacancy rate for Manhattan rose in July, pushed up by the
new availabilities Downtown, such as 552,000 square feet of space
formerly occupied by banker Goldman Sachs at 1 New York Plaza in the
Financial District.