Commercial brokers call it equilibrium: when the Manhattan office market’s vacancy rate ascends to the 7 to 9 percent range, and the negotiation advantage tips toward tenants.
Manhattan may be there now.
A new report on the second quarter from Colliers ABR pegs the Manhattan vacancy rate at 8.7 percent by the end of June, and likely rising fast. That’s an increase from 7.8 percent in the first quarter. For top-shelf Class A office space, the quarterly vacancy rate increase was even steeper: 5.7 percent to 7 percent.
The reasons? Rising layoffs among office-based employees amid a generally stagnant economy. From the report:
At long last the official employment numbers are catching up with the anecdotal evidence flying out of New York securities firms. Up until June the actual employment figures were holding their own although significantly lower than over the first half of 2007. But in June securities layoffs have made their way into the hard data, with those positions down sharply for the month (as termination packages have begun to dry up).