(Read more on the debt and equity markets.)

NEW YORK CITY-Even with the possibility of a downturn on the horizon, the New York City market forged ahead in August with a lower vacancy rate and a higher average asking rent, according to a recent Colliers ABR Inc. report. The report predicts that there will almost certainly be some layoffs in the financial services industry over the next few quarters and this may push into other business sectors as well.

With Lehman Brothers not taking an option on additional space at 399 Park Ave., Macquarie Bank postponing its impending space search and job losses beginning to mount in the suburbs, the tip of the iceberg has begun to appear, the report notes. Robert Sammons, director of research at Colliers ABR, tells GlobeSt.com that the hard evidence includes the two examples above; however, he notes that "more importantly, in my mind, was the anecdotal evidence gathered in speaking with several analysts at financial firms and REITs as well as economists within the New York City government."

However, New York City is going into any possible slump in as good a position as possible with an extremely low vacancy rate, a drought of new development and strong job growth over the past 12 months. For Manhattan in August, the class A vacancy rate dropped to 5.1% from 5.6% in July.

There was not one specific leasing transaction that drove the figure lower but a wide variety of smaller deals across all major submarkets. The average asking rent continued its rise, finishing the month at $83.1 per sf, up 1.4% from $82 per sf in July.

After being somewhat flat for several months, the Midtown class A market showed marked improvement with its vacancy rate falling 40 basis points to 5.2%. This is its best showing since the March-April period earlier this year when it dropped 60 basis points and its lowest vacancy rate since the 5.1% of March 2001. The class A average asking rent climbed to $94.5 per sf, up 1.6% from $93 per sf in July.

The Midtown South overall vacancy rate held steady at 7.2% in August with improvements in Chelsea and Hudson Square offset by increases in availability in the Flatiron and SoHo submarkets. The overall average asking rent eeked out a small increase, closing the month at $45.7 per sf, up from $45.5 per sf.

The class A vacancy rate for Downtown fell below the 5% figure for the first time since April 2001, closing August at 4.9%, down from 5.3% in July. The class A average asking rent got a boost during the month, climbing 2.3% to $57.1 per sf from $55.8 per sf in July.

Instant Insights /

Report Shows Fears for Financial Services Industry

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