Lower Manhattan Oozing With Big Blocks of Vacant Space
The overall Downtown vacancy rate—as it stands today, right now, this very moment—is 10.3 percent. If one were to take that 10.3 percent (FYI: it topped 20 percent in the mid-1990s and 15 percent in the early 2000s), the judgment would likely be that Downtown is back and better than ever, given the more vibrant nature of its existence (more housing, retail, cultural venues, much-improved transportation, etc.).
But there is one humongous reality to face, and that would be some seriously large empty office space about to slide into the vacancy rate figure. This is not exactly a surprise, as much of it has been advertised for months now. By our calculation, there are 21 buildings with at least 100,000 square feet of current or future availability being marketed.
That alone doesn’t sound so bad, especially when one considers there are 45 in Midtown. But Midtown is a much bigger market, and Downtown has, by far, the biggest blocks by square footage coming on-line. Most “in the business” know the big boys I’m talking about—2 and 4 World Financial Center, in addition to 1 and 4 World Trade Center, and others.
Undoubtedly, the vacancy rate will be headed higher very soon, though hopefully some additional leasing will occur within these blocks before their 2013 through 2015 availability dates. That said, if everything is thrown in that has an availability date through 2013, that would take the vacancy rate up to 16.3 percent—600 basis points higher than today.
One must realize that over the next couple of years, with the expectations of an improving economy, the blocks at WTC and WFC will be the only ones of their size around, and with a lower price point than Midtown, they could prove extremely popular.
Despite expected pains in the short term, this should translate to great gains in the long term for Downtown.
Robert Sammons, Cassidy Turley