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Downtown Set to Weather Vacancy Storm

NEW YORK CITY-Reports that Lower Manhattan's office availability rate could peak at 21% are 'not accurate," CBRE's Sheldon Cohen said at a media briefing Wednesday.

By Paul Bubny | Updated on April 14, 2010

NEW YORK CITY-Notwithstanding the big blocks of available office space that have already begun coming to market, Lower Manhattan is positioned to weather the storm, CB Richard Ellis says in a white paper released Wednesday. Sheldon Cohen, senior managing director and head of CBRE’s Downtown office, says the perception that the submarket’s availability will reach 19.6% this year is “not accurate.”

Year-to-date negative absorption Downtown has already reached 1.8 million square feet, compared to 523,000 square feet at this time a year ago, EVP Bruce Surry said at a media briefing Wednesday morning. For example, AIG gave back a block of half a million square feet at 70 Pine St., its former headquarters building, and that is now counted in the totals. But Cohen said that predictions of Downtown’s availability rate peaking at 21% assume that none of the space being vacated by major financial firms will be leased. A more accurate projection, Surry said, is a peak of 16% to 17%.

That negative absorption may turn out to be smaller than feared. For one thing, although Bank of America Merrill Lynch hasn’t publicly disclosed its plans as yet, it now appears that the firm will have “some footprint” Downtown, Cohen said. Following Merrill’s absorption by BofA in late 2008, the general belief was that all of its Downtown space—more than four million square feet among three locations—would go dark.

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