Cushman & Wakefield day before yesterday released third quarter statistics for the Manhattan office real estate market that indicate the first reversal in a rising Downtown vacancy-rate trend that began shortly before Sept. 11, 2001. As of Sept. 30, 2002, the Downtown office vacancy rate was 13.4 percent, compared to 13.6 percent at the end of August. Average asking rental rates have declined slightly in the same period, from $40.09 to $39.92 per square foot.
Kenneth Krasnow, senior managing director and head of C&WÂ's New York office, attributed the occupancy increase Downtown to several factors. 'DowntownÂ's best office buildings are now on the radar of most corporations,' Mr. Krasnow said. 'Incentives and rent disparities between Downtown and Midtown are beginning to make a difference, and fewer space additions have given the market breathing room to catch up.'
According to Mr. Krasnow, barring any major space additions to the Downtown market, the increase in leasing activity and interest Downtown from major space users should keep the vacancy rate steady through the end of the year. 'Although there is a substantial amount of space not being utilized that hasnÂ't officially come to the market, which tends to create a feeling of uncertainty,' he said. 'This is still a hurdle for Dowtown.'
At 13.4 percent, the Downtown vacancy rate has reverted to its second quarter level. Despite a very positive September, it remains more than twice as high than a year ago, when it was 6.4 percent. According to Mr. Krasnow, 'WeÂ've seen a jump in the vacancy rate since last year, but Downtown is in a much better position than it was in the mid-90s and the outlook is healthy.'
According to C&W statistics, the Downtown vacancy rate peaked at 19.5 percent in the first quarter of 1996.
(source: Cushman & Wakefield)