The closely watched Manhattan office market may be on the verge of bottoming out, according to a new report issued by New York-based real estate services firm FirstService Williams.
One key finding from the firm’s second-quarter research indicates that signs of a recovery began to emerge near the end of the second quarter, which officially ended yesterday. Although the Manhattan office market’s total availability rate ticked upwards from 12% to 13.4% during the second quarter, the increase in availability slowed significantly in the latter half of the quarter.
“The availability data for the second half of the second quarter of 2009 portray a substantially different picture about the pace and direction of activity than what was observed in both the first half of the quarter or in the first quarter of 2009. Net additions to the supply of space in the latter half of the second quarter fell to approximately one-half the level we witnessed only a month earlier,” said Mark Jaccom, CEO of FirstService Williams.
A 13.4% availability rate is below the previous cycle’s peak of 14.5%, which was achieved during the first half of 2003. Based on these availability rates, an additional 4.7 million sq. ft. of office space was put on the market during the second quarter, exceeding the 3.9 million square sq. ft. that hit the market in the first quarter.
Based on the FirstService Williams analysis, market performance during the first half of the second quarter was essentially a continuation of the first quarter as demand for space weakened at a very rapid pace. That changed during the latter half of the second quarter as the net total of available space added to the market actually slowed noticeably on a weekly basis.
Robert Freedman, executive chairman of FirstService Williams, added: “There are signs that the worst may be over for the New York City office market, but availability rates are high and that has put downward pressure on asking and taking rents.”