Office Space in New York City is now more available than ever, with the highest availability in 19-years, according to a recent report by Bloomberg news.
Ending 2012, top-quality office space availability in Manhattan moved to 14.5% for the last quarter of 2012, up from 12.3% in the 3rd quarter. That’s not to say this office space in Manhattan is vacant – the report, compiled by brokerage Studley Inc.; defines ‘availability’ as empty floor space zoned for commercial usage, plus executive suites and furnished offices that are slated to become available for lease in the next twelve months.
Manhattan’s Downtown Financial District Main Producer of Open Offices
The majority of available office space in Manhattan is in the downtown Financial District. Midtown Manhattan has seen an increase in space available, but new developments affecting financial district office space means that much of the growth and availability is located downtown in America’s 3rd largest business district.
Some businesses in the financial district are delaying decisions due to economic and environmental circumstances. After Hurricane Sandy in late October, many buildings in the financial district were not usable due to power outages, floodwaters, and damages to building infrastructure. As a result, many firms are still recovering from the damage and disruption to businesses. Smaller firms, particularly those in web and computer-related industries, were aggressive leasers of office space in the financial district during 2012; but demand has been suppressed due to storm-related damage and recovery.
Extenuating Circumstances Largely the Culprit
Economic circumstances, such as the recent election, United States budget discussions, new regulations affecting the financial industry and economic conditions in Europe have affected the decision of some financial firms, causing them to delay leasing decisions until the economic environment is more stable.
Finally, perhaps the biggest factor in the rise of availability in downtown and financial district office space is the opening of the new World Trade Center and World Financial Center buildings. 4 World Trade Center contains 2.3 million square feet of office space, with 1 million square feet currently available for rent. The World Financial Center has 3.3 million square feet either available or becoming available due to the expiration of major bank leases.
With space available, landlords in the area are optimistic that space will be leased in 2013 as economic conditions become more stable and the city of New York makes full recovery from the damage of Hurricane Sandy. The opening of 1 World Trade Center will also boost traffic to the financial district and bring in new tenants not only from the financial industry, but technology, marketing, and government-based firms.