Manhattan’s Class A office market could see its highest vacancy rate since December 1996, said Robert Sammons, vice president of research at commercial brokerage Cassidy Turley, in a column for the New York Observer.
The amount of vacant Class A office space is on track to increase to 33.62 million square feet, from the current 24.48 million square feet of vacancies, by 2013 — a 3.4-percentage-point spike that would bring the vacancy rate to 13.3 percent, the highest level in 17 years.
Sammons determined the vacancy rates by calculating the current amount of vacant space, plus space that will become vacant within six months and all space being marketed for occupancy date by the end of 2013. If net absorption remains flat — which would represent an improvement over the 500,000 square feet of negative absoprtion experienced in the second quarter — Manhattan will be overwhelmed by Class A vacancies. That’s largely because 1 and 4 World Trade Center and 2 and 4 World Financial Center will be opening, and so the downtown submarket will see the worst vacancy rates. However, Midtown could be burdened as well, as a number of vacancies persist along Sixth Avenue. Midtown South should fair best, but the success of all of Manhattan’s Class A office space will hinge on the strength of the global and U.S. economies, Sammons said. [NYO] – Christopher Cameron