New York Market Overview
- Total Manhattan Class A Office vacancies stayed at 8.7 % vacant
- Total New York City Office vacancy stayed at 7.8 % vacant
The vacancy rate for Midtown Class A office space fell last month to its lowest level since the first quarter of 2009. The Midtown Class A vacancy rate was 14.3 percent in January, down from 14.7 percent in December. At the same time, asking rents for Class A space in Midtown were flat, down four cents to $65.15 per square foot. For all classes of Midtown buildings, the vacancy rate fell by .5 points to 13.8 percent and the average asking rent slipped by five cents per foot to $59.43 per square foot. For Manhattan overall, the vacancy rate fell by .3 points to 12.8 percent, and the average asking rent fell by 26 cents per foot to $53.33 per square foot. Capital markets could recover quickly, but fundamentals remain weak.
The volume of new office leasing in Manhattan slipped last month from the 12-month high seen in December but was twice what was recorded in the same period a year ago. For Manhattan overall, the 1.94 million square feet leased in January was 12 percent lower than in December, but was more than twice the level recorded in January 2009, when just 920,000 square feet was leased. The volume of leasing has been an important indicator of stability in the marketplace, because tenants are more comfortable taking space at current pricing levels. The leasing volume dropped in all three Manhattan markets in January, but fell the most in Midtown. Meanwhile, in Midtown South there were positive signs as rental rates rose significantly and vacancy rates fell last month.
As plunging rents and empty office and retail space continue to threaten the city's commercial landlords, prospective tenants are increasingly looking at a building's financial health before committing to a lease. Even if a financially-strapped landlord does not actually default, the strain often becomes obvious in the form of run-down lobbies and stringy heating or air-conditioning.