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News release

New York

Jones Lang LaSalle Reports Manhattan’s Overall Office Vacancy Rate Tops 10% Mark at Year-end 2008

New York Sees Double-Digit Vacancy Rate for 1st Time Since 2004


NEW YORK, January 5, 2009 — Jones Lang LaSalle announced that the Manhattan office market recorded major increases in vacancy rates in all property types in the fourth quarter of 2008 as New York continued to struggle with the impact of the global financial crisis. In the past year, the city’s overall office vacancy rate has increased more than 43 percent, rising to 10.2 percent in the final quarter of the year from 7.12 percent at year-end 2007.
 
“Demand for office space has slowed throughout Manhattan as businesses continue to retrench and announce cutbacks,” said James Delmonte, vice president and director of research. “In the final quarter of the year, the city’s overall vacancy rate breached the 10 percent mark for all property types for the first time since the first quarter of 2004. Sublease space now comprises more than one-third of the Class A space available in the Midtown office submarket.”
 
In the past year, New York posted nearly a 54 percent increase in its overall Class A office vacancy rate, climbing to 10.1 percent in the fourth quarter of 2008 from 6.56 percent in the fourth quarter of 2007. Class B buildings throughout the city recorded a 32 percent increase in vacancy rates, rising to 10.3 percent from 7.8 percent during the same time period.
 
Midtown, which saw the greatest increase in available space in the past quarter, posted an 18.2 percent boost in its overall vacancy rate, rising to 10.8 percent in the fourth quarter of 2008 from 9.1 percent in the third quarter of 2008. Class A buildings in Midtown posted nearly a 25 percent leap in vacancy rates during the same time period, climbing to 11.3 percent from 9 percent.
 
While vacancy rates were also on the rise Downtown, the area saw smaller percentage increases in its vacancy rates than those posted in Midtown and Midtown South. Lower Manhattan recorded a 13.1 percent increase in overall vacancy rates in the past quarter, rising to 9.8 percent in the fourth quarter of 2008 from 8.6 percent in the third quarter of 2008. Class A buildings saw a 3.4 percent increase in vacancy rates during the same time period, growing to 7.7 percent from 7.4 percent. Vacancy rates for Downtown’s Class B product climbed slightly more than 24 percent, rising to 13.2 percent from 10.6 percent.
 
Class A rents slipped 3.8 percent in the same time period, falling to $81.61 per square foot from $84.86. Class B rates decreased nearly 6 percent, dropping to $54.08 per square foot from $57.28 per square foot.
 
Downtown saw the biggest drop in average asking rental rates, fueled by a greater than 9 percent decrease in rents this quarter for the submarket’s Class B buildings. Class B rents fell to $41.73 per square foot in the final quarter of the year from $45.94 per square foot in the third quarter of 2008. Class A rates fell slightly more than 3 percent during the same time period, slipping to $52.94 per square foot from $54.61 per square foot.
 
Midtown South posted the best performance in terms of average asking rental rates. The submarket saw overall rents fall by less than 1 percent in the past quarter, dropping to $55.19 per square foot from $55.47 per square foot. Class A rates dropped slightly more than 1 percent during the same time period, decreasing to $65.15 per square foot from $65.91 per square foot.
 
About Jones Lang LaSalle
 
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2007 global revenue of $2.7 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 1.2 billion square feet worldwide. In the New York area, Jones Lang LaSalle provides leasing and management services for nearly 45 million square feet of commercial real estate. For further information, please visit our Web site, www.joneslanglasalle.com.
 
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