Several big leasing deals combined with a decrease in sublease space helped cut Manhattan office vacancy by 0.1% during June, reports Cushman & Wakefield. That may not be a lot, but in this bleak leasing market it is cause for celebration. Meanwhile, downtown’s vacancy rate fell by 0.7% but the vacancy rate there is still Manhattan’s highest at 12.6%.
Despite the nearly 1% vacancy decline downtown, rental rates slid nearly $2 per sq. ft. "Big deals have helped revive the market. Through midyear, 12 leases of more than 100,000 sq. ft. have been completed in Manhattan, double the amount of similar-sized leases we saw through midyear 2002," says Ken Krasnow, head of Cushman & Wakefield’s New York office.
In addition, Krasnow credits the absorption of sublease space as a positive factor in Manhattan’s vacancy decline. According to Krasnow, major companies are now taking sublease space off the market, including Lehman Brothers and Citigroup, which both have decided to hold onto space they originally placed on the sublease market.
Cushman & Wakefield’s outlook for the remainder of the year is tied to job growth. A recent jobs report from the New York City Office of Management and Budget (OMB) shows that the city’s unemployment rate dipped from 8.5% to 8.3% during the second quarter. Krasnow adds that if the stock market continues to improve "the vacancy outlook will improve decisively."