Volume 22, Number 14 | The Newspaper of Lower Manhattan | Aug. 14 - 20, 2009
By Patrick Hedlund
Downtown office lows
Average asking rents for Downtown office buildings have fallen more than 12 percent over the last six months, with forecasts indicating that prices could drop below $50 per square foot for the area’s highest-quality properties by next year.
According to a report from brokerage Jones Lang LaSalle, average rents for all Downtown office buildings have slipped 12.4 percent during the past six months — from $48.75 per square foot to $42.70.
The area’s top-class trophy properties, which went for an average of just over $70 per square foot a year ago, have seen nearly a 7 percent decrease over the last six months —from $64.54 per square foot to $60.23.
The report stated that the sub-$50-per-square-foot scenario has already occurred at some Downtown properties. If trophy buildings were to suffer similar drops, Downtown asking rents would return to levels not seen in five years.
Rents for all Downtown office types tumbled nearly 16 percent over the last year, compared to 17 percent decrease in Midtown.
“Longer-term, beyond 2011, the trophy market outlook is decidedly more positive,” James Delmonte, vice president and director of research for Jones Lang LaSalle’s New York office, said in a statement. “New construction will nearly halt over the next five years, except for scaled-back work on the World Trade Center. In the early to mid-1990s, the last time new construction was severely limited, pent-up demand caused rents to spike in the latter part of the decade.”
Downtown retail rents showed significant slippage as of midyear, following the trend of double-digit decreases across Manhattan’s major commercial corridors.
Along Broadway, Downtown’s most active retail stretch, rents fell as much as 20 percent in some areas, according to a second-quarter report from brokerage CB Richard Ellis comparing prices to end-of-year 2008.
In Soho — on Broadway between Houston and Broome Sts.— retail rents dropped by 6.03 percent since the fourth quarter of last year, from $510 per square foot to $481 in midyear 2009.
Lower Manhattan fared worst of all, with rents along Broadway between Chambers St. and Battery Park tumbling 20.34 percent over the last six months, from $251 per square foot to $209.
“With national G.D.P. looking like it is close to bottoming out, and the traditional strength of Manhattan as a global retail magnet, the second half of 2009 should see a marked improvement in the market,” said Alison Lewis, senior managing director and head of CBRE Tri-State Retail, in a statement.