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October, 2002: Manhattan Office Space Update


Prices continue to drift downward as companies are holding off on finalizing leasing decisions. Leasing inquiries are up as firms are exploring the attractive pricing that is available both in Midtown and Downtown. Wall Street layoffs and the new Federal White Paper requiring financial firms to be diversified geographically are adding additional pressure on an already saturated leasing market.

There is now a $20-25 per Rentable square foot price differential in Class A direct Space between Midtown and Downtown. Therefore a number of Midtown firms are exploring downtown's lower cost alternative and the Midtown prices are starting to moderate to lower the price differential.

Landlords and sub-landlords (companies trying to rent out excess space) continue to add more soft dollars for work and free rent in addition to the already attractive prices.

Quality Midtown subleases in Class A buildings are available for $25-$33/Rentable Square Feet complete with furniture and phones. Direct leases Downtown are available at $24-$28/Rentable Square Feet including new installations and substantial free rent.

Downtown Incentives are still available and firms who were originally declined are encouraged to reapply.

Please feel free to contact us for more detailed pricing information.

 MANHATTAN CLASS A OFFICE VACANT SPACE (In Millions of Rentable Square Feet))
   Direct  Sublease,  Total  % Vacant
Direct		  % Vacant
Total		  % Monthly
Change
Midtown Manhattan Office A 16.5 7.37 23.87 7.0% 10.1% 36.51%
Midtown Manhattan South Office A 0.88 0.48 1.36 8.9% 13.7% 29.56%
Downtown Manhattan Office A 5.97 2.89 8.86 11.0% 16.3% 2.18%
Total Office A 23.35 10.74 34.09 6.8% 10.6% 27.31%
             
MANHATTAN CLASS A OFFICE VACANT SPACE NOW AND IN THE NEXT TWO YEARS
(In Millions of Rentable Square Feet)
   Direct  Sublease  Total %Monthly
Change		    
Midtown Manhattan Office A 29.82 10.80 40.62 27.86%
Midtown Manhattan South Office A 1.00 0.57 1.57 0.70%
Downtown Manhattan Office A 8.28 3.95 12.23 -1.64%
Total Office A 39.10 15.32 64.42 20.45%    
             


 MANHATTAN TOTAL OFFICE MARKET VACANT SPACE (In Millions of Rentable Square Feet))
   Direct  Sublease  Total % Vacant
Direct		 % Vacant
Total		  %Monthly
Change
Midtown Manhattan Office 17.91 7.40 25.31 7.4% 10.5% -1.32%
Midtown Manhattan South Office 8.14 3.37 11.51 12.3% 17.4% 5.77%
Downtown Manhattan Office 9.78 3.86 13.64 12.6% 17.6% 2.05%
Total Office 35.83 14.63 50.46 9.5% 13.3% -0.99%
             
MANHATTAN TOTAL OFFICE MARKET VACANT SPACE NOW AND IN THE NEXT TWO YEARS
(In Millions of Rentable Square Feet))
   Direct  Sublease,  Total %Monthly
Change		    
Midtown Manhattan Office 31.66 10.86 42.52 1.32%
Midtown Manhattan South Office 10.37 3.87 14.24 0.92%
Downtown Manhattan Office 12.79 5.15 17.94 -1.83%
Total Office 54.82 19.88 74.70 -2.68%
             
* % Monthly Change from September 2002            

New York City Market Trend Observations:

  • Over the past month, total sublease vacant space fell slightly and total direct lease vacant space decreased from 36.64 million RSF to 35.83 million RSF. However, the past six months have seen an increase in total market vacancies from 44.21 million RSF to 50.46 million RSF.
  • As with the Market as a whole, the Class A office space vacancies grew from 24.78 to 34.09.
  • The slight rise in the total vacant space was driven by a rise in the availability in the total direct lease vacant space.
  • Over the past month, Midtown South showed the greatest increase in total vacancies rising from 10.85 million RSF to 11.51 million RSF, followed by Downtown 13.36 million RSF to 13.64 million RSF, while total vacancies in Midtown fell somewhat from 25.64 million RSF to 25.31 million RSF.
  • The decline in total vacant space in Midtown was largely due to a fall in available direct lease space from 18.12 million RSF to 17.91 million RSF.
  • The rise in total vacant space in Midtown South was due to an increase in available direct lease space from 10.85 million RSF to 11.51 million RSF.
  • While the total sublease vacant space has been fairly constant over the past six months, the available total direct lease vacant space has steadily increased from 33.4 million RSF in June to 35.83 million RSF in October.