There were no surprises in the Manhattan commercial real estate market in the first quarter of this year, according to Mark Jaccom, CEO of FirstService Williams. The market continued to decline, with the availability rate rising to 12 percent, up from 10.9 percent at the end of the fourth quarter of 2008, according to a first-quarter report from the commercial real estate firm released today.
“Large financial institutions that are major users of space in the city had earlier announced both employment reductions and goals to utilize less space per employee,” so the higher availability rate isn’t unexpected, Jaccom said.
The average Manhattan asking rent declined to $65.18 per square foot in the first quarter from $74.49 per square foot in the last quarter of 2008, a 12.5 percent drop quarter-over-quarter and a 17.9 percent decline from the rent peak in the second quarter of 2008.
The increase in sublease space on the market has been a strong factor in the rent drop, according to the report. Now, 25 percent of available office space is for sublease, up from under 20 percent in the first half of 2008.
What the report refers to as the Midtown North submarket is leading the downturn, with an availability rate of 13.3 percent at the end of the first quarter, up from 7.2 percent in the second quarter of 2007. Last week, Jones Lang LaSalle reported a 13.5 percent vacancy rate for all Midtown Class A office space in the first quarter. TRD