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Report: commercial market stabilizes.

Continued strong leasing activity combined with a lack of new construction has brought about stabilization in the Manhattan commercial real estate market, reports Newmark Real Estate' Services in its Third-Quarter Office Market Report.

While vacancy rates increased slightly from Mid-Year, the overall market continues to show signs of stability and renewed vitality, including hearty leasing activity and the slowing of the return of space to the market.

"The Manhattan commercial real estate market - especially the Midtown market - is shaping up with somewhat stable rents and declining availabilities i n certain markets," said Barry Gosin, Newmark's President.

According to the Newmark Third-Quarter Office Market Report, the vacancy rate for Midtown Manhattan stands at 15.71 percent (or approximately 32 million available square-feet) compared with the 16.03 percent rate charted last year at this time. Average asking rents in Midtown are charted at $32.22 per square-foot, a 3.67 percent decline from the $33.45 rate charted last September 30th.

According to the Newmark Report, certain Midtown market segments are faring much better than others. For example, "Class A" product in the Plaza District (Third to Fifth Avenues, and from 50th to 61st Streets), experienced a 15 percent decline in its vacancy rate over the last year, from 16.5 percent to today's 14.04 percent rate. At the same time, "Class B" space in the Midtown West District (from Sixth to Eighth Avenues, and from 42nd to 57th Streets), witnessed a 5.17 percent increase in available space, going from a 12.03 percent vacancy rate last year to a 12.65 percent rate as of September 1, 1993.

"At a time when prime office space is being offered at competitive prices, 'Class B' space will suffer the loss of tenants to the flight to quality," Gosin said. "This trend will continue until prices begin to climb again."

The Downtown Manhattan office market has also strengthened over the last year. Today's vacancy rate of 16.56 percent (or 57.76 million square-feet of available space) represents a 1.9 percent decline over the 16.88 percent rate charted last year at this time. The average asking rent in this region of the market stands at $27.07 per square-foot, a slight decline from the $28.17 price charted last year at this time.

Within the Wall Street/Financial District, "Class A" space experienced a 13.23 [section of] decline in availabilities over the last year. At the same time, "Class B" space suffered a dramatic increase in available space, from a vacancy rate of 19.18 percent to today's 24.01 percent vacancy rate.

"Clearly, recovery in the Downtown office market is lagging behind the Midtown market," Gosin said. "The alternative markets in the Midtown South district are also lagging slightly behind the return to health of the Midtown market."

The Midtown South market (from Park to Sixth Avenues, and from 20th to 31st Streets) experienced a small decline in availabilities to boast an 11.52 percent availability rate. The SoHo/Lower Broadway District, which includes only "Class B" space has a vacancy rate of 22.65 percent (representing 1.5 million square-feet of available space).

The Newmark Office Market Report is released on a quarterly basis by Newmark Real Estate Services, a division of Newmark & Company Real Estate, Inc.
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Title Annotation:Newmark Real Estate Services reports on New York, New York commercial real estate market in Third-Quarter Office Market Report
Publication:Real Estate Weekly
Date:Oct 20, 1993
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