High office vacancy rates in Lower Manhattan are quickly becoming a thing of the past, as businesses pinched by high rents in Midtown are snatching up office space in the cheaper, growing downtown market. The vacancy rate for downtown dropped five points in the past year, to its current rate of 6.3%, according to a quarterly report released yesterday by the brokerage firm Cushman Wakefield.
Rents in Midtown are up more than 30% from a year ago, fetching an average price of $75 a square foot for high-end, class A office space, with numerous leases signed for more than $125 a square foot. High rents have also caused a flurry of office building sales this year. "These are historic increases in prices," the COO of Cushman Wakefield for the New York region, Joseph Harbert, said.
While numerous businesses are still willing to shell out a premium for the cachet of a Midtown address, brokers say the prices are too high for many midsize businesses, which can look southward to find rents at two-thirds the cost. High office vacancy rates in Lower Manhattan are quickly becoming a thing of the past, as businesses pinched by high rents in Midtown are snatching up office space in the cheaper, growing downtown market.
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