New Reports Say Lower Manhattan Office Market Has Entered Unchartered Territory
A pair of analyses from real estate firms points to a worsening crisis for office buildings in Lower Manhattan. According to the real estate investment firm Colliers, Lower Manhattan office vacancies are running at 21.7 percent as of the end of February, the most recent month for which data are available. This metric has become steadily grimmer from two points of comparison: one month earlier and 12 months earlier, when it stood 20.8 percent and 20.4 percent, respectively.
A second report, from global commercial real estate services firm Cushman & Wakefield pegs the vacancy rate for Lower Manhattan offices even higher, at 23.7 percent. Both reports say their respective vacancy figures are the highest for any submarket in Manhattan. This softness comes in spite of the lowest asking rents for any three major markets in the borough, with Lower Manhattan discounted by almost 25 percent relative to Midtown and Midtown South. Colliers and Cushman Wakefield both say their respective figures represent records for vacancies in Downtown commercial properties.
The Cushman report also estimates that there is approximately 20.2 million square feet of vacant office space in Lower Manhattan, which is the equivalent of nine empty Empire State Buildings.
This ongoing meltdown has led to a scramble amid developers to repurpose moribund office properties, especially for residential use. Among recently announced conversions in Lower Manhattan are 222 Broadway, 55 Broad Street, 85 Broad Street, and 25 Water Street. Together, just these four properties are likely to bring more than 3,000 additional homes (or roughly 6,000 new residents) to the community.