At the close of 2011, the overall Manhattan vacancy rate eased to 10.9 percent, down 110 basis points from the 12.0 percent of one year ago, something landlords should be thankful for as the New Year begins. That said, 2010 saw an even better annual showing as that figure dropped 150 basis points (from 13.5 percent to 12.0 percent).
And though brokers have been relatively busy throughout the year grinding out some flashy and not-so-flashy leasing transactions, deals have generally consisted of tenants relocating to equal or less space or just renewing in place. Expansions and new tenants to the market remained a rather limited commodity. Overall direct availability managed to improve by 9.0 percent in 2011, dropping to 39.2 million square feet from 43.1 million square feet, its best figure since March 2009.
Overall sublet availability, meanwhile, slid by 10 percent in 2011, dropping to 9.8 million square feet from 10.9 million square feet, its best figure since September 2008. For all of Manhattan, expect some improvement to continue in 2012, due, in part, to the fact that no new buildings will be surfacing during the year. And, as we all know, the key to any significant improvement will be—all together now—jobs!
After the jump, a brief look at the 2011 performance and a 2012 forecast of the three major submarkets:
• Downtown, somewhat surprisingly, was most improved with its vacancy rate plummeting to 10.5 percent from 13.3 percent (some former office space was taken out of the market as further residential conversion is planned). Expect a steady figure for most of 2012, though toward the end of the year, the rate might begin to climb higher as availability from the World Financial Center enters into statistics.
• Midtown South was quite an active submarket as its vacancy rate eased to 9.5 percent from 12.0 percent one year ago. Continued activity among a multitude of industries but primarily new media and technology should keep this area strong throughout 2012, though finding prime space could become challenging.
• Midtown actually ended the year as it began, with an 11.6 percent vacancy rate. This submarket remains very dependent on financial services, however, and it remains to be seen if there will be any recovery for that industry in the next 12 months.
Robert Sammons, Cassidy Turley