New York Market Overview
- Total Manhattan Class A Office vacancies decreased from 8.5 % vacant to 8.3 % vacant
- Total New York City Office vacancy decreased from 7.3 % vacant to 7.2 % vacant
The unsteady economy and the compression of the financial services industry have lessened demand for office space recently. Developers point to the city’s growing tech, law and media sectors for relief, though those tenants tend to prefer using smaller space more efficiently to signing for extremely large blocks. The developers of the buildings, 1 World Trade Center, 4 World Trade Center and 51 Astor Place, say they aren’t worried because of the dearth of new construction in the years preceding the upcoming one. But the one high-profile property to be built recently, at 11 Times Square, has failed to land tenants for 60 percent of its 1.1 million square feet more than a year after opening. The success of these developments could determine how soon if other high-profile projects, like Hines Interests’ 7 Bryant Park and the Related Companies Hudson Yards, get off the ground.
Commercial office leasing in Lower Manhattan totaled 5.86 million square feet in 2011, an 80 percent increase over 2010.
Thirteen of the top 20 leases for the year were for over 100,000 square feet. Total office vacancy for the area ended the year at 9.5 percent, down from 9.9 percent in the second quarter of 2011 and 11.5 percent in the last quarter of 2010. Lower Manhattan also maintained its ranking as the business district with the third-lowest vacancy rate in the nation.
Asking rents in the Manhattan office leasing market continued to rise in January while vacancy rates tightened, even as total activity appeared to slow from last year’s overall brisk pace.
The financial services industry, the motor behind much of New York City’s economy, has been quietly exiting space, which bodes extremely poorly for the city’s real estate market. The city could lose approximately 10,000 securities jobs by the end of the year, according to statistics from the New York state comptroller. One in eight jobs in the city relies on securities firms, the comptroller’s data indicate.
In addition to the nearly 2 million square feet firms like Bank of America and UBS have already announced that they are getting rid of, there is another 600,000 square feet of office space about to come to market. Manhattan’s 10 largest investment banks lease or own just under 32 million square feet, 6 million less than in 2008.