Most Manhattan submarkets had higher vacancy rates and lower rents in the third quarter of 2008, according to a third-quarter office market report from Jones Lang LaSalle released today.
Overall vacancy rates in Midtown increased to 9.1 percent in the third quarter from 8.6 percent in the previous quarter. Downtown, vacancy rates in Class A buildings increased to 7.4 percent in the third quarter, from 6.9 percent a quarter earlier, largely because space at 1 World Financial Center and 40 Wall Street came online, the report said. Overall rental rates Downtown dropped by less than 1 percent, to $50.76 per square foot in the third quarter from $51.22 per square foot the previous quarter.
The Class A market in Midtown South improved. Midtown South saw a 10 percent drop in vacancy rates and an increase in average asking rents of more than 5 percent. The area was less affected than other submarkets by the financial crisis because financial services firms take up only 13 percent of the occupied office space in Midtown South, while they occupy 35 percent of occupied office space in the Downtown submarket, the report determined.
The overall vacancy rate in Lower Manhattan also improved in third-quarter 2008, the report said, because of two Class B leases, New York Law School’s lease of 46,000 square feet at 40 Worth Street and Restricted Stock Partner’s lease of 23,500 square feet at 26 Broadway. TRD