NEW YORK (Reuters) - The deterioration of the Manhattan office availability rate slowed in the second quarter, signaling the worst may be over for the market, real estate services company FirstService Williams said in a report.
Although the Manhattan office market’s total availability rate -- which includes vacant space plus space scheduled to become available within a year -- rose to 13.4 percent in the second quarter from 12 percent in the first, the increase slowed significantly in the latter half of the quarter, according to the report released to Reuters on Sunday.
That could help major Manhattan landlords such as SL Green Realty Corp, Vornado Realty Trust, Boston Properties Inc and Brookfield Properties.
During the second quarter an additional 4.7 million square feet of office space was put on the market, surpassing the 3.9 million square feet that hit the market in the first quarter.
The 13.4 percent availability rate is still below the last cycle’s peak of 14.5 percent reached in the first half of 2003.
The firm, which monitors space changes on a weekly basis, said the rise in the availability rate in the first half of the second quarter was essentially a continuation of the first quarter as demand for space weakened rapidly.
That changed during the latter half of the second quarter as the net total of available space added to the market noticeably slowed.
“The availability data for the second half of the second quarter of 2009 portray a substantially different picture about the pace and direction of activity than what was observed in both the first half of the quarter or in the first quarter of 2009,” Mark Jaccom, FirstService Williams chief executive, said in a statement.
Net additions to the supply of space in the latter half of the second quarter were about half the level seen a month earlier Jaccom said.
“As the quarter ended, we also found that firms that earlier were not even beginning the decision making process quickly shifted and ramped up their search activity,” he said.
Earlier this month, CB Richard Ellis Group Inc, said that asking rents had fallen 28 percent in Midtown Manhattan, a big enough drop to show a re-pricing of leasing terms and signaling the approach of a market bottom.
At the Reuters Global Real Estate Summit last week, commercial real estate experts said that adding in months of free rent and tenant improvements, rents had fallen about 50 percent.
Reporting by Ilaina Jonas; Editing by Phil Berlowitz