Office vacancy rate at 5-year high: report

TRD New York /
Oct.October 06, 2009 01:44 PM

Manhattan’s overall office vacancy rate has reached a five-year high, according to Cushman & Wakefield’s third-quarter commercial real estate market report. Vacancies reached 11.1 percent by the end of third-quarter 2009, marking a 0.6 percent increase from a quarter earlier.

The amount of space leased year-to-date totaled 11.3 million square feet, down 27.8 percent from the same time last year when leasing volume was 15.7 million square feet.

This decline in leasing activity comes even as average asking rents dropped to $57.08 per square foot, a 5.2 percent decline from the second quarter.

While sublease activity has been steadily increasing throughout the year, the third quarter saw a reduction in inventory to 11.1 million square feet from 11.4 million square feet in second-quarter 2009. Still, 12 of the 54 lease transactions totaling 50,000 square feet so far this year, as of the third quarter, were subleases.

Joseph Harbert, COO of Cushman & Wakefield’s New York Metro region, said that the high sublease activity is an indication of market instability, in a press release.

“A decline in sublease space is indicative of the market beginning to move towards stabilization,” Harbert, said. “Historically, high-quality sublease space, which is competitively priced, comes off the market first.”

The report attributed the decline in sublease inventory in part to steep discounts.

The company expects the vacancy rate to rise.

“Overall we expect vacancy will continue to rise reaching a peak of somewhere about 14 percent in the middle of next year, and that will include the new construction completions as well as the expectation that we will still have negative absorption,” Kenneth McCarthy, a managing director of research for the New York area, said at today’s breakfast briefing on the data. TRD


Related Articles

arrow_forward_ios
From left: Brandon Shorenstein of Shorenstein Realty, Steven Roth of Vornado, John Westerfield of Mitsui Fudosan America, and Stephen Ross of Related (Getty, iStock)

TRD Insights: These office landlords are most exposed to Big Tech’s #WFH movement

TRD Insights: These office landlords are most exposed to Big Tech’s #WFH movement
Mayor Bill de Blasio and Gov. Andrew Cuomo (Getty, Paul Dilakian)

Despite looting, NYC reopening on track: Cuomo

Despite looting, NYC reopening on track: Cuomo
From left: 151 West 42nd Street, 655 Third Avenue and 1221 6th Avenue (Google Maps, Durst Organization)

TRD Insights: Manhattan office leasing inches up

TRD Insights: Manhattan office leasing inches up
(Photos by Sylvia Varnham O'Regan, Getty)

After looting, BIDs reverse guidance on boarding up stores

After looting, BIDs reverse guidance on boarding up stores
“5 years ago, people would say, what’s a TikTok?” Bill Rudin on why NYC’s office market may be more resilient than you think

“5 years ago, people would say, what’s a TikTok?” Bill Rudin on why NYC’s office market may be more resilient than you think

“5 years ago, people would say, what’s a TikTok?” Bill Rudin on why NYC’s office market may be more resilient than you think
Clockwise from bottom left: Robert Reffkin of Compass, John Gomes, Scott Rechler of RXR Realty, Rich Barton of Zillow, Gary Keller of Keller Williams and Don Peebles of The Peebles Corporation (Getty)

“America is in crisis:” Real estate leaders address George Floyd protests

“America is in crisis:” Real estate leaders address George Floyd protests
A mass timber project in Cleveland is now under construction and could be the nation’s tallest when completed. Harbor Bay Real Estate Advisors’ Intro development will rise nine stories with 298 residential units (Credit: Harbor Bay Real Estate Advisors)

Mass timber project in Cleveland could be nation’s tallest

Mass timber project in Cleveland could be nation’s tallest
Joy Construction’s Eli Weiss (left), Maddd Equities’ Jorge Madruga (top), and Drew Katz with 20 Bruckner Boulevard in the Bronx (Getty; Google Maps)

“Dream” comes true for long-vacant Bronx ice house

“Dream” comes true for long-vacant Bronx ice house
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...