Manhattan office rents drop 44%

[FarCenter]

Net effective rents—the average price office tenants pay for space after factoring in concessions such as months of free rent—are down 44% from their peaks in 2008.

Manhattan office space has hit the sale bin big time, but renters are still holding back. Net effective rents—the average price office tenants pay for space after factoring in concessions such as months of free rent—are down 44% from their peaks in the first quarter of 2008, according to the midyear report released Tuesday morning by real estate services firm Cushman & Wakefield. Meanwhile, leases for a total of 6.3 million square feet were signed during the first half of the year—the slowest pace in over two decades.

The report pinned much of the blame for a declining appetite for space. Since the recession began, the city has lost 117,400 jobs—3.0% of the total. Nonetheless, Cushman research head Kenneth McCarthy noted that the city’s employment decline is less severe than the national average of 4.7% of jobs. He also pointed out that New York’s job losses have been less than many people—including city officials—had forecast.

“In January, it was widely anticipated that New York would lose 300,000 jobs more or less in the current downturn,” he noted. “Today it is more likely that the total job loss will be more in the range of 250,000.”
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