Manhattan Starts Q3 Strong as Vacancy Falls

In the past year, the Manhattan vacancy rate has fallen 2.8%, closing July at 7.5% as available space decreased by 26%. Year-to-date leasing remains nearly each to that from a year ago, while rental rates rose consistently during July, according to the study.

At $44.32 per sf, Manhattan's overall asking rent climbed $3.71 per sf during the past 12 months to reach its highest point since Q3 2002.The overall vacancy rate, down 0.9% from June '06, remains within equilibrium levels at 7.5%, and sits well below the 10.1% figure for the comparable year-ago period. Midtown, Midtown South and Downtown all recorded increases in asking rents during the month of July.

A lack of new large blocks coming on the market enabled vacancy rates to remain low and stable during July. During the past several quarters many financial tenants have taken space off the market in preparation for future expansion. One example is 245 Park Ave., where JP Morgan Chase took in excess of 210,000 sf off the market. Consequently, vacancy rates should continue to drop as available space is taken off the market and leasing activity remains on pace. All of these factors bode well for a continued healthy Manhattan market.