It’s no secret that Manhattan’s bustling office market is tight. But it also turns out that this narrow island of real estate boasts the lowest office vacancy and highest asking rents of any major North American market.
After hitting 9.6% at the end of July, Manhattan Class A vacancy rate dropped to 9.4% over the next month, according to commercial real estate brokerage Colliers ABR. Tenants who put space on the market earlier this summer but then decided to take that space back in August reportedly triggered the decline, says Colliers ABR research director Robert Sammons. “Overall activity has picked up over the past 30 days after a weak spring and early summer,” he says.
Out of the top 14 office markets in North America, Manhattan is the only one with vacancy below 10% and average asking rents running above $50 per sq. ft. In fact, Manhattan’s $52.33 per sq. ft. average asking rents represent its highest level since the $52.67 per sq. ft. recorded in February 2002.
Washington, D.C., took second place with 10% vacancy and average Class A rents running slightly below $50 per sq. ft. at the end of August. Houston came in last place with 21.5% Class A office vacancy. With many New Orleans businesses relocating to Houston after Hurricane Katrina, however, it’s possible that Houston office vacancy will narrow in the coming months.