Lower Manhattan’s office market saw declining rents and record-low leasing activity during 2009, but ended the year with activity on the rise and vacancies on a recently-rare downward trend, according to the Alliance for Downtown New York’s Real Estate Market Year in Review for 2009 (click here for the full report). Rising from 7.4 percent in the fourth quarter of 2008 to 9.9 percent in the third quarter of 2009, office vacancies dropped off to 9.6 percent by the close of the year.

Commercial office tenants in the Downtown market tended to sign on for smaller spaces and shorter terms, according to the report. “Downtown may need to adjust further to compete with low-priced sublease space and precipitously falling rents in the Midtown market,” the report noted.
In the residential market, sales volume dropped 52 percent over 2008, largely on a decline in inventory. Meanwhile, rentals held up relatively well: vacancies in Downtown rental units hovered at around 2 percent, which the report attributed to consistent demand for such inventory. TRD [more]