Office Leasing Sees Double-Digit Declines

NEW YORK CITY—Manhattan’s office market took a predictable slide during the first quarter, with its overall availability rate reaching 12%, according to new research from FirstService Williams. A Jones Lang LaSalle report released Friday uses roughly the same figure—11.9%, to be precise—in characterizing the vacancy rate for class A office along with the availability rate for office as a whole. Year-over-year, the class A vacancy rate has climbed 66% from the 7.2% figure recorded at the end of Q1 2008, says JLL.

“The fact that overall conditions deteriorated in the opening quarter of 2009 is hardly surprising,” Mark Jaccom, CEO of FirstService Williams, says in a release. “Large financial institutions that are major users of space in the city had earlier announced both employment reductions and goals to utilize less space per employee. Going forward, the questions for many tenants center on projected occupancy costs in 2010 and 2011.”

As has been the case historically, Midtown led the office market during the quarter—but in this case, the leadership was in negative indicators. Williams puts Midtown’s availability rate at 13.3%, an 85% increase since Q2 2007 and only 1.4 percentage points below the peak it reached in Q2 2003. The JLL report says overall availability in Midtown office has risen to 12.8%, reaching 13.5% in class A properties. These figures represent increases of 63% and 71%, respectively, from the year prior.