Downtown Office Vacancies Increase

Manhattan’s class-A office market took a slight hit in October, as vacancies rose and asking rents ticked down, according to a new report from real estate brokerage firm Colliers ABR.The weaker performance was mainly due to New York’s downtown market, which saw three blocks of space encompassing about 1.5 million square feet hit the market in September and October.The report, to be officially released later this week, found the vacancy rate rose to 10.5% in October from 10.1% in September. However, that’s still down from 11.1% a year ago.Asking rents slipped to $47.66 a square foot from $47.80 in September, mainly due to the “struggling downtown market,” the report said. A year ago, asking rents were $46.08 a square foot.Asking rents in downtown fell to $33.35 a foot on average from $35.03 in September and $36.27 a year ago, while the vacancy rate in Lower Manhattan climbed to 14.5% from 13.2% in September and 12.4% a year ago.Research Director Robert Sammons of Colliers said Prudential Financial dumped about 600,000 square feet onto the downtown market at 1 New York Plaza while JP Morgan Chase put about 900,000 feet on the block at 95 Wall St. and 1 Chase Manhattan Plaza. “And that really caused the jump in the vacancy rate down there,” he said.Midtown fared much better. Its vacancy rate was 9.3%, which was flat with September and down from 11.1% a year ago. Asking rents in Midtown averaged $56.88 a foot, up from $55.78 in September and $50.79 a year ago. Although there were a few large blocks that came onto the market in Midtown in October, Mr. Sammons expects vacancy rates in the area to improve in November and December. “There are some big tenants out there floating around and the big blocks are really disappearing pretty quickly in Midtown,” he said. “The asking rents are shooting through the roof in Midtown,” with some small blocks of space fetching as much as $100 a foot, he said.Mr. Sammons still believes Manhattan’s overall vacancy rate for class-A office space will fall below 10% by year end. Although Lower Manhattan is struggling with excess space, he still remains bullish about the market’s long-term outlook. Mr. Sammons said there’s been a surge in financial services firms hunting for space. “There’s everybody from Bear Stearns to Wachovia that are planning to add jobs and are taking space and planning to add more jobs,” he said. “You’ve got a lot of guys floating around out there wanting to gobble up more space.”The surge in activity has that “late ’90s feel to it, which is a bit spooky,” he said. “But hopefully they’re being a little more cautious this time around.”

Downtown Office Vacancies Increase

Downtown Office Vacancies Increase

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