Cushman & Wakefield today released year-end statistics for the Manhattan office real estate market that indicate a stable outlook through 2003. Despite a soft 2002, overall leasing activity for the year totaled 20.8 million square feet, above last year´s level of 18.9 million square feet, according to C&W Research.
As of Dec. 31, 2002, the overall office vacancy rate in Manhattan was 12 percent, up from 9 percent a year ago. However, the rise in vacancies slowed significantly from the third quarter 2002, when they stood at 11.8 percent. Average asking rental rates have declined to $42.96 per square foot from $46.67 a year ago, and from $44.13 at the end of the third quarter.
Bruce Mosler, president of U.S. Operations at C&W, pointed out that Manhattan is holding up well relative to other major U.S. central business districts. 'The Manhattan vacancy rate is well below the national average, and a relatively stable fourth quarter lends credibility to a positive outlook at the start of 2003,' Mosler said. At year-end, the average national vacancy rate for central business districts was 14.8 percent, 2.8 percent higher than Manhattan´s average.
'Demand for office space is still low, but the upturn in leasing activity signals stability in 2003,' said Ken Krasnow, senior managing director and head of C&W´s New York office. 'Midtown South and Downtown should see their vacancy rate decline by the end of 2003, while Midtown will face some challenges due to the delivery of new construction at Times Square Tower, 300 Madison Ave. and Columbus Circle.'
Krasnow cautioned that any positive outlook for 2003 hinges on job growth and the sublease market. 'Subleases are competing with direct space and space is starting to be filled,' Krasnow said. 'But if the market experiences any more major space additions due to corporate downsizing, we´ll be looking at higher vacancies by the end of this year.'
Although the securities industry has continued to see a decline in employment, some industries are expected to experience job growth in 2003, including law, insurance, membership organizations and engineering.
(source: Cushman & Wakefield)
