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Downtown Remains Stable in Down Market

NEW YORK CITY-Lower Manhattan's office, residential and retail sectors are feeling the economic strain but holding up under pressure, says a report from the Downtown Alliance.

By Paul Bubny | Updated on March 04, 2010

NEW YORK CITY—Lower Manhattan’s commercial market is remaining stable as 2010 progresses, notwithstanding the specter of massive space givebacks as financial sector tenants downsize or vacate. A report by the Alliance for Downtown New York notes that the submarket continues to boast one of the lowest office vacancy rates in the US, while the area saw twice as many retail openings in 2009 as in 2008.

The report’s summary of the past year’s office market provides the bad news first, pointing out that the sector “showed the stress of the economy” throughout the year. If there were 6% more leases signed on a year-over-basis, they tended to be smaller, meaning that the year-end tally of 2.89 million square feet was off 7% from the year prior and 58% from the peak in 2006. However, the Downtown Alliance’s report states, “the year ended on a positive note as vacancy declined for the first time in five quarters and the Downtown market showed an uptick in leasing activity.”

Eleven Lower Manhattan leases of 100,000 square feet were signed during ’09, topped by the 265,082-square-foot Gap Inc. deal at 40 Worth St. The Downtown Alliance report notes that eight of the 11 were in the professional services, FIRE and government sectors that constitute the largest employment bases in the submarket.

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