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Concessions are Decreasing

NEW YORK CITY-With vacancy rates here hitting a two-year low, the number of concessions are decreasing. Investment sales are on track to have a banner year.

By Barbara Jarvie | Updated on October 04, 2004

NEW YORK CITY-The third quarter figures have rolled in and what’s good news for landlords might be bad news for tenants as the number of concessions are decreasing. “Concessions are going down,” said Cushman & Wakefield’s executive managing director Ken Krasnow during the company’s third-quarter results breakfast. “We’re seeing it across the board with prebuilts and with larger deals where the overall value of TI and free rent is having an effect.”

According to C&W’s statistics, new leasing in the city has increased by more than six million sf compared to the same period a year ago. That strong leasing activity resulted in a decline in the overall office vacancy rate in Manhattan to 11.4%, its lowest quarterly rate in more than two years. For the nine-months ending Sept. 30, new leasing activity measured 20.9 million sf, compared to 14.9 million sf through the first nine months of 2003.

Larry Zuckerman, senior managing director for Grubb & Ellis agrees, but sees tenants taking more than 100,000 sf still having leverage with landlords. “It’s true to an extent. It’s a bit of an impact, but not drastic.”

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