Report: Office shortage may hit Manhattan by '08

Report: Office shortage may hit Manhattan by '08


By Tom Acitelli
March 8, 2006

Manhattan could face an acute shortage of high-quality office space as early as 2008, according to a report out Wednesday by brokerage CB Richard Ellis. The borough's office market continues to tighten as vacancy rates decline on the heels of fresh leases spurred by a generally healthy economy -- and landlords are the main beneficiaries, as the dropping vacancy rates are coming in tandem with higher asking rents.

The CB Richard Ellis report analyzed different variables of the Manhattan office market, including future demand for high-end space, overall employment growth, the rising population of office-based workers, the quality of existing available space, and the cost of new construction. Based on a projection of a 1.4 percent annual increase in the number of office-based employees and projected office inventory, the report stated, Manhattan vacancy rates will drop below 5 percent by 2008 and below 3 percent in 2009. The current vacancy rate, the brokerage reported, is 6.82 percent.

And, if past correlations between vacancy rates and asking rents hold, asking rents could trump $90 a square foot in Manhattan by the end of this decade. The current asking rent for office space is just over $45 a square foot, according to CB Richard Ellis.


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