NYC office vacancies dip in Q2, but expected to rise by year’s end

The New York City office vacancy rate declined 20 basis points to 11.5
percent during the second quarter but is projected to rise in the
coming months as companies continue to downsize, according to the
latest office market report and forecast from Marcus & Millichap.

Despite
continued job gains citywide, many businesses are still under-utilizing
their office space and are likely to consolidate as their leases
expire, the report says. Furthermore, 6.9 million square feet of new
office space is currently under construction in the city — 70 percent
of which is accounted for by the World Trade Center projects — and 11
million square feet more is in the planning stages.

Meanwhile,
although the number of office leases is up 31 percent year-over-year,
asking office rents dropped 9.3 percent during that time to $53.30 per
square foot during the second quarter on weak demand and competition
from cheap available sublet space, Marcus & Millichap said.
Effective rents hit $43.02 per square foot, a 12.8 percent decrease
from one year ago. Asking rents are expected to drop further still to
$52.87 per square foot by the end of the year, according to the report.

On the sales front, office deals dove 22 percent year-over-year and median prices slid 19 percent to $299 per square foot. TRD