Manhattan office vacancy rate hits six-year low

Rents above $70 psf for first time since 2008: CushWake

TRD New York /
Jul.July 21, 2015 04:10 PM

Manhattan office vacancy rates have dipped below 9 percent for the first time since 2009, according to commercial brokerage Cushman & Wakefield, which also found that a robust Midtown market has propelled overall asking rents to a seven-year high.

The declining vacancy rate, which hit a six-year low of 8.8 percent, saw asking rents in the borough climb to more than $70 per square foot for the first time since 2008, according to Cushman.

Class A asking rents averaged nearly $76 per square foot across the borough – a 7.2 percent increase year-over-year – and the brokerage saw rent increases in 18 of the 20 Manhattan submarkets it tracks, according to Ron Lo Russo, Cushman’s New York Tri-State Region president.

The Midtown market’s 10.5 million square feet of new leases through the first half of 2015 represented a 12.5 percent year-over-year increase. Vacancy rates in Midtown fell to 8.9 percent.

Downtown vacancy rates at the end of the second quarter stood at 10.3 percent, while Midtown South “continues to be the tightest Central Business District in the nation” with vacancy at 6.2 percent, according to Cushman.

While the Downtown and Midtown South markets continue to see asking rents reach “all-time highs,” Midtown rents are still operating roughly 10 percent below their previous peak during the last cycle, Cushman executive vice chair Josh Kuriloff said.

But continuing tightness in the Manhattan office market could prompt asking rents to climb even higher, Kuriloff said, citing the previous such rent spike in 2005, when vacancy rates in the borough dropped to 7.5 percent.

Investment sales in the city are on pace to exceed $75 billion by year-end and are outperforming initial forecasts of between $60 billion and $65 billion, according to Robert Knakal, the brokerage’s chair of New York investment sales.

The Brooklyn market is on pace to reach a record $9 billion in investment sales, Knakal said, with the number of sales this year already having approached last year’s total.

Related Articles

50 Rockefeller Plaza and Katten's Chris DiAngelo (Credit: Google and Katten)

Katten law firm moving to Rockefeller Center

The Coca-Cola building at 711 5th Avenue (Credit: Google Maps and iStock)

Flipped off: The inside story of Coca-Cola’s botched building sale

111 West 57th Street (Credit: iStock)

Another legal door closes for jilted investor at 111 West 57th Street

113-119 East 55th Street and Arthur Zecekndorf of Zeckendorf Development (Credit: Meridian Investment Sales and Getty Images)

These are the details on Zeckendorf Development’s latest residential project

Vineyard Vines HQ sold in Stamford, Avon inks Rye deal & more Westchester and Fairfield real estate news

Real estate tech investor Fifth Wall launches $500M fund

New heights for Everest as insurer inks North Jersey’s largest lease deal of 2019

This Westchester development site just hit the market seeking nearly $30M