Only 13 major leases, those of more than 100,000 sf, were signed all of last year.
"We did say in the middle of the war that we thought if it was a short war there would be a boost in the market and that is the trend we have seen over the last two months," says Ken Krasnow, senior managing director and head of Cushman's New York office. "It has been a tale of two markets."
That increase and significant sublease-space reductions throughout the city combined to help reduce the overall vacancy rate in June, says Krasnow.
For the one-month period ending June 30, the overall vacancy rate in the city--including Midtown, Midtown South and Downtown--decreased 0.1% falling to 12.5 percent from 12.6 percent at the end of May. Downtown experienced the most significant decline where the vacancy rate fell from 13.3 percent at the end of March to 12.6 percent, Cushman reports. Despite the rise in leasing activity, average asking rental rates continued to decrease Downtown from $38.24 per sf at the end of the first quarter to $36.36 per sf. Overall, Manhattan rents dropped off slightly from $41.97 to $41.12 during the same period."Last quarter we talked about the promise of downtown, and in fact, the last quarter has proven that," says Krasnow. "It is a dominant submarket."
Krasnow cited several leasing transactions completed during the second quarter that affect the vacancy rate, including Health Insurance Plan of New York at 55 Water St. at 467,556 sf, the Associated Press at 450 W. 33rd St. at 290,773 sf and Mass Mutual at Two World Financial center at 193,761 sf.
All over the city companies are also pulling space previously available for sublease off the market, with two recent examples being Lehman Brothers and Citigroup. Shadow space is still a concern Downtown, he adds; however, "companies are seeing the light at the end of the tunnel."
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