Manhattan’s commercial real estate brokers talk about vacancies the way newlyweds talk about divorce. It happens, just not to us.
Our island market is thought to be sheltered from the forces of over-building that imperil other cities. But in October 2007, 3 million square feet of office space flooded that market in a single month. “The news has caused a low buzz of concern in the industry,” wrote the New Jersey Record, “that this could be the first sign that New York’s office market is not as impregnable as once thought.”
Fast-forward three years, and we have to hand it to our neighbors in Jersey. Several of the huge vacancies that opened up in that black month still haven’t been filled, and many more have come onto the market since then. Of the three biggest space hogs in Manhattan, banks have collapsed and many media companies have shrunk; only law firms have held their own.
In 2010, mega-leases were signed by companies like Société Générale, Proskauer Rose and Polo Ralph Lauren-though none as big as 2009’s largest of 540,944 square feet by Paul Weiss. Leasing volume was higher last year than in both 2008 and 2009, according to Grubb & Ellis’ 2011 Forecast for the New York and the Tri-State Area, to be released this week. At last, deal activity climbed back up to the 13-year average.
Dozens of companies jumped around, taking advantage of a weak market to lock down cheap rents and sweet concessions. In the final tally, they took a 2.5 million-square-foot chunk out of the 52.5 million square feet of office space available at the beginning of 2010, according to the report.
Looking ahead to 2011 now, the year will see a “market of situations,” said Richard Persichetti, market research director for Grubb & Ellis, meaning that landlords with nearly full buildings will be able to command higher rents and fewer concessions, while those with more empty space will keep offering recession-era deals. Overall, he expects the vacancy rate to continue declining this year.
Click through our top 10 list of the Manhattan towers with the most available space, contiguous and otherwise, and it reveals that in many cases, the glass (and brick and concrete) is still half-empty. From the chilly halls of 58 Broad Street to the darkened windows of 11 Times Square, there’s plenty to watch in 2011.
The data was provided to The Commercial Observer by CoStar, and is current as of the end of 2010.
Click through 10 Biggest Available Spaces: Watch What Happens