The New York’s office market continues to remain widely affected by the economic decline. According to the NYT, three out of every four office towers in Midtown Manhattan – where many of the world’s largest financial companies are headquartered – now have sublet space available. Vacancies are rising and rents are falling sharply in both class A and class B office space buildings. Brokers say that many sublandlords will have to bend over backward to sublease their space, given the spike in vacancies.
From The NYT: In Midtown Manhattan….13 percent of….Class A space — was available in April, up from 6.5 percent a year earlier, according to Colliers ABR, a commercial real estate services company. And sublets now account for some 40 percent of the space available in Midtown, compared with 30 percent of the much smaller total that was available a year ago, the company said.
Robert Sammons, the managing director in charge of research at Colliers ABR, said that sublet space in trophy office towers along Madison Avenue and Park Avenue has been leasing for as little as one-third of what that space might have commanded in early 2008, at the height of the roaring market.
“A year and a half ago, this space might have leased for $150 per square foot,” Mr. Sammons said, while he has heard of recent sublets in high-end buildings in this office corridor with annual rents of as little as $40 to $50 a r square foot. “This is the most remarkable turnaround in pricing that I’ve ever seen in such a short period of time.”
$150 per square foot is quite high. Asking rent for midtown Class A buildings peaked at nearly $97 per square foot in May ’08.