Grubb & Ellis New York has released its Fourth Quarter 2008 office market trends.
•Vacancy climbed to 6.6%, while availability soared to 11.6%
•Taking rents down 10% to 15% on average, while asking rents down only 2.5%
•Lease renewals accounted for 35% of 26.4 million square feet leased, compared to 22% in 2007
•Over 5.5 million SF sublease space added to market—28% of all available space
•Office investment volume down 69% from 2007
Click picture for the full report: 
2 comments:
While the speaad widens the market should soften. Vacancy rates will rise until this corrects.
Has new building construction slowed or should I say, new approvals for building. The building that are underway now have been in the process for a while and may not indicate future committment to the market. Has the space been over built in this cycle as in past cycles?
Richard, thanks for your comment. Yes, building construction has certainly slowed significantly and requests for building permits are a fraction of what they were a year ago.
However, most of the building projects that were canceled or put on hold were residential projects anyway.
I do not believe that the market has been "over-built." When the market crashed in the early '90s, it was in part due to a ton of over-building in the late 80s. Due, to tax incentives, developers had to get their projects started before the incentives ended, and many office buildings were built on spec.
Developers have learned their lesson, and only one new building is being built on spec at this time - 11 Times Square by SJP properties. The other new large developments - 1 Bryant Park, and the NY Times Tower were built for Bank of America and the NY Times, respectively.
This said, in the early 2010s, the WTC will come online, and will bring a lot of supply to the market (albeit, a good amount is already committed). By then, I believe the market will have recovered enough to handle the influx of space.
It's also worth noting, that the NYC market has still not replaced all the space that was lost on 9/11 and from the downtown residential conversions.
For some charts on past construction as compared to current construction, check out: http://www.brokerednyc.com/2008/10/learning-from-history-its-not.html
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