The economic downturn has continued to pummel the luxury office market in Manhattan, according to Jones Lang LaSalle’s spring 2009 Skyline Review. The report shows that average asking rates for high-end office space dipped to $83.66 per square foot in spring 2009, from $102.85 per square foot in fall 2008. Over the last six months, average asking rents dropped by 18.7 percent.
“We are forecasting that asking rents for Midtown Class A office buildings will decline by approximately 40 percent from peak to trough (of which 25 percent has already occurred),” James Delmonte, vice president and director of research for Jones Lang LaSalle’s New York office, said in the report.
Spring 2008 saw drastically different figures — Manhattan’s high-end office rentals were leased for an unprecedented $123 per foot, the report says.
“High-paying hedge funds and other top financial firms” had been a crucial force driving the luxury rental market during the upturn, the press release for the report says.
Despite the downturn, the outlook for asking rents in 2011 is much stronger, Delmonte said. “In the early to mid-1990s,” he said, “the last time new construction was severely limited, pent-up demand caused rents to spike in the latter part of the decade.” Delmonte pointed to the World Trade Center as one of only a few construction projects he expects to see in the near future. TRD