Downtown looking up

Real Estate Weekly, Oct 9, 2002 by Parke Chapman

For the first time since the terrorist attacks, Downtown's commercial vacancy is dropping.

As of Sept. 30, Downtown's vacancy rate was 13.4%, two tenths lower than a month earlier.

Cushman & Wakefield's third quarter statistics show that average asking rents declined slightly during the same period from $40.09 to $39.92 per SF.

"Downtown's best office buildings are now on the radar of most corporations. Incentives and rent disparities between Downtown and Midtown are beginning to make a difference, and fewer space additions have given the market breathing room to catch up," said Kenneth Krasnow, senior managing director and heads of Cushman & Wakefield's New York office.

Barring any major space additions to the Downtown market, Krasnow sees increased leasing through the end of this year.

"Although there is a substantial amount of space not being utilized that hasn't officially come to the market, which tends to create a feeling of uncertainty," said Krasnow.

Despite what the report deems a "very positive" September, Downtown's 13.4% vacancy rate remains more than twice as high as it was one year ago.

Elsewhere in Manhattan, Midtown's vacancy rate continued to rise. As of the end of the third quarter, its vacancy rate was 10.7%, up from 9.9% at the end of the second quarter. Asking rents have fallen from $50.79/SF at the end of the second quarter to $50.08 at the third quarter's close.

Midtown South's vacancy rate hasn't changed much since the third quarter of last year, when it was gauged at 8.7%. It now stands at 8.9%. Average asking rents here are $35.82/SF versus $36.34 at the close of the second quarter. The average asking rents at this time last year were $41.38.

Manhattan's overall vacancy is 11.8%, up from 11.7% this past August. It's vacancy rate at this time last year was 7.6 percent. Average asking rents in Manhattan are $44.13/SF, down from $44.46 at the end of the second quarter. These rents were gauged at $47.79 at this time last year.

The report highlighted several Downtown leases that were signed during the third quarter. They include:

* Aon at 199 Water St. (88,468 SF)

* Richard Spears Kibbe & Orbe at One World Financial Center (81,269 SF)

* Liberty Mutual Insurance at 55 Water St. (62,971 SF)

* Euro Brokers at 199 Water St. (61,526 SF)

* Port Authority of New York and New Jersey (57,336 SF)

* Chubb Corporation at 55 Water St. (46,980 SF)

* FolksAmerica Reinsurance at One Liberty Plaza (40,621 SF)

* Deloitte & Touche at Two World Financial (40,000 SF)