Office market vacancy rates are up significantly over last spring in Manhattan, according to a new report from brokerage Colliers ABR. The increases seem, at first, incremental; but they’re actually quite significant for a market that last year had gotten used to month after month and quarter after quarter of steady vacancy rate drops as tenants leased more space at ever higher rents.
The vacancy rate for Midtown, for instance, the borough’s top office submarket, increased from 6.4 percent in June 2007 to 8.2 percent this June. The vacancy rate for top-shelf, Class A towers in Midtown increased to 7.4 percent in June from 5.5 percent a year ago.
The vacancy rate for Manhattan Class A space generally increased in June to its highest percentage since July 2006, according to the Colliers ABR report. By the end of June, there were 16,093,407 square feet of available Class A space in Manhattan, up from 12,558,158 in June of last year.
Vacancy rates for Midtown South and for Downtown were also up annually and monthly. In Midtown South, the all-important Class B rate (that’s the dominant type of office space in that submarket) was up to 10.4 percent in June, from 7.1 percent in June 2007.
What’s it all mean?
The Manhattan office market’s tied very closely to the local job market, particularly that part of the job market that, well, requires offices (more on this quasi-law of nature here). Perhaps the layoffs and the general economic anxiety has found a roost in the once seemingly indomitable Manhattan office market.
It’ll be a while, if ever, however, before things truly spiral downward. As the Colliers ABR report notes, "another 9 million square feet would need to be added to the vacancy column to reach" the 11.3 percent Manhattan vacancy rate reached in late 2003–a record high, so far, for the decade.