Nearly one-third of that added inventory was brand-new space: SJP Properties' 11 Times Square, counted in the tally by Cassidy Turley (formerly Colliers ABR) for the first time. At the moment, the speculative office property is 100% vacant although published reports suggest that could change by the time the tower comes on line later this year. Another newly added property, the new Goldman Sachs headquarters at 200 West St., is counted as 100% occupied. With these new properties in the mix, Manhattan's total office inventory is 449.1 million square feet.
Although figures may vary by company due to differing measurement methodologies, the consensus view of reports by CBRE, Cassidy Turley and Jones Lang LaSalle is that Manhattan's vacancy rate did decline month-over-month in January. CBRE's figures show a 10-basis point drop from 9.8% in December '09 to 9.7%, while Cassidy Turley says it was 13.5% in December and 13.3% last month. Coming in between those figures is JLL, which puts the island's overall vacancy at 12.8%.
According to JLL, Midtown's class A vacancy rate "improved slightly" to 14.3% during January, compared to 14.7% at the end of this past year. "Several large deals that were supposed to close in December carried over into the new year," according to JLL. Due to the increase in activity and "no notable blocks of space" placed on the market, the class A vacancy for Midtown dropped below 14.5% for the first time in nearly a year, JLL says.
The overall Midtown South vacancy rate fell to 14%, compared to 14.4% in December, according to Cassidy Turley. Submarkets with the most improvement were Hudson Square and SoHo/NoHo/Village. Downtown, the overall vacancy rate ticked upward to 7.8% in January from 7.6% at year's end, says CBRE.
In class A properties Downtown, vacancy rate remains "technically still within equilibrium levels" at 8.8%, according to JLL's report. The comparatively low vacancy rate Downtown "may be the 'calm before the storm' as several large dispositions are looming. Vacancy levels are expected to rise steadily over the next few years as several firms reevaluate their real estate needs."
While a year-over-year comparison by CBRE shows that asking rent declines continued through 2009, falling from $63.65 in January '09 to $48.86 per square foot last month, the reports suggest that the market is stabilizing. "Manhattan average asking rent appears to be nearing the bottom of the cycle (if it is not already there) with the overall figure closing January at $50.80 per square foot, down only slightly from $51.10 per square foot in December," wrote Robert Sammons, managing director of research, in the Cassidy Turley report. "For Class A space alone, the average asking rent climbed to $63.05 per square foot from $62.80 per square foot, the second consecutive monthly increase."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
