Commercial side’s ‘flight to quality’

High vacancies, unemployment hurt office market

From the September issue: As everyone knows, the Lehman Brothers bankruptcy and the economic chaos that followed wreaked havoc on the Manhattan commercial market.

On the sales side, two years later, premium assets in some central neighborhoods are again commanding big price tags, but conditions are nowhere near pre-Lehman levels.

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And the office leasing market continues to struggle with high vacancy rates and lower rents.

According to data from the CoStar Group, vacancy rates have remained above 10 percent year-to-date, while average rents in Manhattan for Class A office buildings over 15,000 square feet slipped to $49.28 per square foot in the second quarter. By way of comparison, the vacancy rate was just 7.3 percent and the average rent per square foot was $75.01 in the third quarter of 2008. [more]