According to the research department of GVA Williams, the current average asking rent in Midtown North is $64.21 per sf, a $1.66 drop in asking rents for the same quarter last year. The net effective rent has plunged to $54.01 per foot, approximately $5 less than the net effective offered last year. In the second quarter of 2000, asking rents averaged $65.23, while net effective rents were averaging $58.95.
"Because owners are facing a slowdown of demand for office space on the market, they are offering more free rent to potential tenants," says GVA Williams CEO and president Michael T. Cohen. "Owners are also offering an increased renovation package."
As a result, effective rents are dropping steeply. "Last year owners, on average, were offering a $25 work letter per sf and three months of free rent. This year, the workletter has increased on average to $35 and owners are offering up tosix months of free rent," says Cohen.
Mass layoffs continue, and Manhattan office space continues to return to the market. For instance, Reuters has just announced plans to lay off 1,000 employees. The international press service has its offices at 625 Madison Ave. Rebate purveyor eSave.com has just been evicted from its New York offices for failure to pay rent.
"Overall availability will likely hit 10%, and prices could drop further before the market begins to reverse course," says Cohen. "Perhaps the first quarter of 2002 it will become a buyer's market again."
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