Midtown Manhattan office rents fell 33 per cent in 2009 as New York’s financial industry cut staff and relinquished space, commercial property broker FirstService Williams said in a report.
Rents in the nation’s most expensive office district dropped to US$59.31 a square foot in the fourth quarter and are down almost 50 per cent when concessions including temporary free rent are included, the New York-based broker said on Tuesday. Financial companies occupy more New York office space than any other non-governmental employer. They cut 25,200 local jobs in the 12 months through November, helping push the city’s unemployment rate to 10 per cent, according to the New York State Department of Labor.
‘Employment is not going to trend up with any alacrity,’ FirstService Williams executive chairman Robert Freedman said in an interview. ‘We’re going to see a very, very modest uptick in demand’ for offices. The percentage of available space in Midtown climbed to 14.9 per cent from 11.9 per cent a year ago, FirstService Williams said. The rate applies to office space between 34th Street and Central Park in Manhattan.
The decline in neighbourhood rents showed signs of levelling off as more than one million square feet along Park Avenue, Fifth Avenue and Avenue of the Americas were leased in the fourth quarter, FirstService said. Landlords stopped increasing incentives to lure tenants, the broker said.
Downtown rents declined 22 per cent in 2009 to US$38.60 a square foot and availability jumped to 13 per cent from 10.5 per cent at the end of 2008. Most of the available space downtown was added in the fourth quarter.
Between 8 per cent and 10 per cent of downtown leases signed in 2009 were for financial tenants, according to FirstService’s preliminary numbers. About 30 per cent of the New York City office market is already occupied by the industry.
‘With the financial sector still a major driving force in the downtown market, recovery in lower Manhattan may be slower than expected,’ Mr Freedman said.
In Manhattan’s Midtown South area, roughly located between 34th and Canal streets, office availability climb to 11.7 per cent from 8.5 per cent at the end of last year. Asking rents averaged US$39.73 a square foot, down 28 per cent from a year ago.
Source: Business Times, 31 Dec 2009