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Office: Wall Street Woes Could Weigh on Office Market

Consolidation and relocation likely to open up huge blocks of space.

By Paul Bubny | Updated on March 21, 2008

Turmoil in the financial services sector, highlighted by the collapse of Bear Stearns, could weigh upon the Manhattan office market’s fundamentals as the year continues, according to experts in leasing and sales.

Reports that JPMorgan Chase’s acquisition of Bear Stearns could put hundreds of thousands of sf on the market followed just a few days after Marcus & Millichap Real Estate Investment Services forecast a growth of 16,000 jobs citywide in 2008. “In normal circumstances, we’d be talking about net gain in job growth,” says Edward Jordan, regional manager of Marcus & Millichap’s Manhattan office. “On the other hand, if you look at some of the layoffs and consolidations that have been planned, there could very likely be another 2.5 million to three million sf of space available for sublet this year that not had not been anticipated.”

Already this year, the availability rate in the Manhattan office market had risen slightly from 8.2% in January to 8.4% in February, with nearly 1 million sf added, according to the monthly market snapshot from Newmark Knight Frank. Along with freeing up large blocks of Midtown space, the Bear Stearns deal could jeopardize JPMorgan’s plans to build a tower for its investment banking group on the site of the former Deutsche Bank building at 130 Liberty St. Instead, JPMorgan announced it would move the group into the Bear Stearns building at 383 Madison Ave.

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