New York Market Overview
- Total Manhattan Class A Office vacancies decreased from 8.4 % vacant to 8.3 % vacant
- Total New York City Office vacancy stayed at 7.6 % vacant
The vacancy rate for Midtown office buildings hit its highest level in more than 15 years last month, in part by several large blocks of space that were placed on the market. Overall Manhattan was mixed, showing some strength in the Midtown South market where the vacancy rate declined modestly and prices rose for Class A office space. The Midtown vacancy reached 14 percent, its highest level since March 1994 when the rate reached 14.1 percent. Asking rents also fared poorly in the district, falling 1.2 percent to $58.16 per square foot. In a positive sign, the vacancy rate for all classes of buildings in Midtown South fell .1 points to 14.1 percent and the average price for Class A office space rose by $1.36 per square foot to $50.88 per foot. But for all classes of buildings, the average asking rent fell by $0.48 per foot to $39.88 per square foot.
The amount of free rent that landlords are offering to entice reluctant tenants to sign contracts has hit record levels in the current downturn, despite the fact that asking rents have started to stabilize in parts of the Manhattan leasing market. In the third quarter, two Midtown leases were signed with 17 and 18 months of free rent, double the average of eight and a half months. Even longer rent-free periods were being negotiated. Average asking rents are now down 29 percent from the peak of $71.92 per square foot in July 2008.