Manhattan Office Space Occupancy Declines While Rents Increase
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You would think that occupancy rates and rental rates would coincide. Not in Manhattan as increases in inventory have raised the vacancy rate by 1.8 percent over the past year. As the occupancy rates declined the rent charged tenants in Manhattan has increased.
Rents in Manhattan are up 21 percent in the past year. Wow!
The new inventory being brought in to the market is obviously much better quality driving the average rent to over $71 in the city.
To put it into perspective, if you were paying the average rent in Manhattan for a 2,000 square foot office it would cost nearly $12,000 a month just for the rent before common charges.
Vacancies in the most expensive U.S. office market rose to 7.1 percent from 5.3 percent a year earlier, the highest since the third quarter of 2006, New York-based Cushman, the largest closely held commercial real estate brokerage, said today. Sales of Manhattan commercial property declined 59 percent in the first half of 2008 compared with the same period last year. Rents rose to $71.59 a square foot, up 21 percent from a year earlier and 6.6 percent from the previous three months. via Bloomberg.com
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Comment by Joe on 2 July 2008:
Part of the decline in Commercial Real Estate property sales is due to the Subprime lending problems that hurt and put so many commercial lenders out of business. Lenders are now staying away from those creative and questionable deals, they’re looking for perfect or near perfect deals. However, talking to many buyers they just can’t get the financing as in past to make the purchase, but as I explain to them, they are over looking the other alternative Commerical Real Estate financing options, for instance, Real Estate Investment Trust(REITs); Bond Offerings; Real Estate Hedge Funds; and Private Hard Money Investors that can finance deals that banks and traditional lenders won’t in this present market.
PS,
Joe
Commercial R.E. Financing
http://www.bvgfin.com