Declining Availability Rates Testify to Recovering Market

NEW YORK CITY-Newmark’s first quarter numbers for the Manhattan office market are in and the firm’s director of research likes what he sees.

Kovid Saxena points to the decrease in the availability rates for the overall market from 12.4% in the fourth quarter of 2004 to 12.1% in the first quarter of this year. These numbers have steadily declined over the past four quarters, dropping from 13.1% in the first quarter of 2004 to 12.8% in the second quarter and to 12.3% in the third, according the firm’s research.”The market is certainly continuing to recover,” Saxena notes. “The availability rates have been declining steadily over the past few quarters. Particularly interesting is that Downtown has experienced a decline in availability rates for the first time in several quarters.”Specifically, according to the firm’s 1Q05 Statistical Overview, the rates dropped to 16.4% this past quarter from 16.5% in the fourth quarter of 2004. The slight dip comes after several quarters of increases. The figure came in at 14.2% in the second quarter of 2004, 14.9% in the third quarter and 16.5% in the fourth quarter, according to Newmark’s research. The decrease can be attributed to several large leases Downtown, such as the SEC’s decision to take 235,000 sf at Three World Financial Center, Saxena adds.Michael T. Cohen, chairman, executive committee at GVA Williams, also likes what he sees happening Downtown. Speaking at a real estate outlook event sponsored by LePatner & Associates, the Rampart Group, Sterling National Bank and Berdon LLP on April 6, Cohen looked toward the future. “The long-term outlook for [Downtown] is terrific and the city needs it,” he said. Cohen added that trends in the other markets, Midtown and Midtown South, are pushing people to Lower Manhattan. “Downtown will be the Midtown South of the 21st century and it will start with a few pioneers.”But what happens in the Manhattan office market overall depends, to a great extent, on unemployment rates and job growth, Saxena says. “For the market to recover it has to have support.”