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News release

New York

Jones Lang LaSalle Reports 66% Boost in Manhattan’s Class A Office Vacancy Rate in Past Year

Net Effective Rents Down 30%+ Since Fall 2008


NEW YORK, March 27, 2009 — Jones Lang LaSalle announced that Manhattan’s Class A office market recorded a 66 percent increase in vacancy rates in the past year as the city continued to deal with rising levels of available office space. The city’s overall Class A vacancy rate has climbed to 11.9 percent in the first quarter of 2009 from 7.2 percent one year earlier.
 
“A period of prolonged layoffs coupled with a steep decline in demand has led to increased availabilities and more vacancy citywide over the past year,” said James Delmonte, vice president and director of research. “New leasing activity has waned considerably, with three of the top five transactions so far this year being renewals. Deal volume has slowed to the point that just four transactions larger than 100,000 square feet were completed in Manhattan in the first quarter of the 2009, compared to more than 17 in the first quarter of 2008.”
 
In the past 12 months, New York posted a 55 percent increase in its overall office vacancy rate, climbing to 11.9 percent in first quarter of 2009 from 7.7 percent one year earlier. Class B buildings recorded a 43 percent increase in overall vacancy rates, rising to 11.9 percent from 8.3 percent during the same time period.
 
Midtown Manhattan posted a 63 percent increase in overall vacancy rates in the past year, rising to 12.8 percent in the first quarter of 2009 from 7.8 percent in the first quarter of 2008. The submarket’s Class A buildings, which so far have taken the brunt of the office space give backs, recorded a 71 percent boost in vacancy rates during the same time period, reaching 13.5 percent from 7.9 percent.
 
Downtown also dealt with a significant increase in vacancy rates over the past year, although the submarket’s Class A office market was the tightest in New York. Class A office buildings Downtown posted a nearly 60 percent increase in vacancy rates in the past 12 months, climbing to 8.2 percent in the first quarter of 2009 from 5.2 percent on year earlier. Lower Manhattan saw its overall office vacancy rate increase 35 percent during the same time period, rising to 10.3 percent from 7.7 percent.
 
With Manhattan’s office market seeing available office space increase every quarter over the past year, the city has seen a corresponding decrease in average office asking rental rates in all property types and in every submarket of the city.
 
Overall asking rents fell nearly 10 percent in the past 12 months, dropping to $64.43 per square foot in the first quarter of 2009 from $71.26 per square foot in the first quarter of 2008. Class A rents slipped 11 percent in the same time period, falling to $74.88 per square foot from $83.98 per square foot. Class B rates decreased more than 12 percent, dropping to $49 per square foot from $55.92 per square foot.
 
Downtown posted the largest decreases in rates during the past 12 months, fueled by a greater than 18 percent drop in rents for the submarket’s Class B buildings. Class B rents fell to $38.55 per square foot in the first quarter of 2009 from $47.17 per square foot on year earlier. Class A rates fell slightly more than 10 percent during the same time period, slipping to $48.22 per square foot from $53.63 per square foot.
 
Midtown recorded a nearly 11 percent decrease in overall average asking rental rates in the past year, falling to $73.05 percent square foot in the first quarter of 2009 from $81.73 per square foot in the first quarter of 2008. Class A rates dropped slightly more than 12 percent during the same time period, decreasing to $81.92 per square foot from $93.15 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 2008 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 1.4 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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