The Plaza Class A vacancy rate closed August at 13 percent–the highest vacancy rate of the 14 Manhattan submarkets. It climbed 120 basis points last month alone, thanks to a new 492,000-square-foot chunk of space now available on a direct basis at the Kushner Companies- and Vornado Realty Trust-owned 666 Fifth Avenue.
Much of that is from Citigroup (which is consolidating to other Manhattan locations). A portion—238,000 square feet—is also being marketed on a short-term sublease basis (through mid-2014 or so), although that was taken into consideration when arriving at the 13 percent figure above. As mentioned in the past, Midtown (and especially the Plaza submarket) has suffered more deeply in this so-called recovery because of its dependence on still-struggling financial services firms.
Landlords, however, have continued to price much of the space as if the market was chugging along just fine, with the average asking rent for the Plaza submarket now at $86.26 per square foot (the highest of any submarket in Manhattan by far, though the figure is down slightly for two months in a row). This prime Midtown submarket is not likely to hold the “Highest Manhattan Vacancy Rate” title for much longer, as the much talked-about blocks of space at the World Financial Center and the soon-to-be-completed World Trade Center will enter the numbers very soon, causing the World Trade submarket’s Class A vacancy rate to balloon to—gasp—almost exactly 25 percent.
*Vacancy rate is calculated currently by space currently vacant or that will be vacant up to six months from the current date.
Robert Sammons, Cassidy Turley