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NEW YORK CITY-The vacancy rate for Manhattan office space rose 0.4% to 6.5% in June, according to a new report from Grubb & Ellis. It also notes that this borough has seen 5.9 million sf of negative absorption since the beginning of the year, including 1.1 million sf from the month before.

Through May 2000, most of the square footage coming to market was sublet space. But for the first time this year, direct space has become a major factor, amounting to almost half the sublet space.

Like the month before, in June Midtown South posted the highest vacancy rate, 8.7%, up 0.4%, while in Midtown and Downtown the rate rose to 6.5% and 6.2% respectively. The highest negative absorption, 2.1 million sf, was recorded in Downtown, most of it in the Wall Street area. Midtown South was also a victim of growing negative absorption, the bulk of it from 360 Park Ave.

Not surprisingly, overall asking rates continued to slide in June, declining 2% to $53.43 per sf for the month and 6% for 2001. In Midtown, rates have come down 4% since January and for the first time in more than a year are nearing sub-$60 per sf.

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