Manhattan office rents decline

Bloomberg

Fourth-quarter rents dropped 4.8 percent to $69.44 a square foot from the third quarter, broker Cushman & Wakefield Inc. said in a report Tuesday.

Leasing slid to the lowest since 2001 as companies signed up for 19.1 million feet of space last year. Lehman Brothers Holdings Inc.’s bankruptcy, the acquisition of Merrill Lynch & Co. and the steepest plunge in U.S. stocks since the Great Depression last year contributed to the highest vacancy rates since May 2006.

The downfall
"This quarter was like no other quarter we’ve ever seen before," said Joseph Harbert, chief operating officer of Cushman’s New York metro region, in an interview. "It’s as if someone let the helium out of the balloon. The downfall of Lehman really changed the real estate consumer’s psychology, and put everyone in a cautious, wait-and-see, don’t-make-a-decision attitude."

The amount of space tenants put on the market for sublease more than doubled last year to 8.2 million square feet. More than 31 million feet of space is now available in Manhattan, a 43 percent jump over year-end availability in 2007.

Across the U.S., office vacancies rose to 14.4 percent in the fourth quarter, the highest in three years, according to a report from Reis Inc., a New York-based real estate research firm. Asking rents fell 0.3 percent, the company said.