Winter Blast: Never Mind the Big Deals, Office Vacancies Climb
Spring, dear reader, is a fickle season.
No, we’re not just talking about the wrath of Zeus that came down on Sunday, but the equally dampening news that Manhattan office vacancies are on the rise. They climbed for the second straight month, according to Cassidy Turley’s Manhattan Market Research Newsletter for February 2011.
The vacancy rate closed February at 12.3 percent, up from 12.1 percent. Even Class A spaces—supposedly rarer than emeralds these days—were up slightly to 11.3 percent, from 11.2 percent.
Despite the increase in empty space, landlords also demanded higher rents last month. The average asking rent for Class A spaces jumped to $59.45 per square foot from $58.89 a foot. “That’s totally not unexpected with sublet space pulling back,” Robert Sammons, Cassidy Turley’s research guru, told The Observer.
But what about huge leases signed by Deloitte, Bloomberg, Li & Fung and the like? “They didn’t really balance out all of the space that came back to the market,” said Mr. Sammons. Several of the major deals—International Securities Exchange comes to mind—were renewals. They didn’t compensate for the mega-blocks that came back on the market, and for the one or two, such as the Societe Generale space at 1221 Sixth Avenue, that have yet to come on the market.
The good news is there are still 55 tenants looking for more than 125,000 square feet, according to Mr. Sammons. “I consider it really a blip,” he said, “which should make everyone feel better.” In contrast, downtown, he said, is stable for now, but could experience a flood of space in 2013 or 2014, when the World Trade Center spaces are complete.
While tenants jockey for space and landlords play hardball, it looks like we can all settle down: At least for now, there’s still more the enough space to go around.