Downtown Will Be Flooded – With Office Space
Large blocks of new office space, such as Three World Trade Center, are expected to push the percentage of vacancy rates higher in Downtown Manhattan. The rents that office properties can charge tenants will also suffer from the increased competition, driving rental rates down.
Demand was weak for office space downtown in 2016, with negative absorption, meaning the tenants emptied more office space than they filled by signing new leases. A strong pipeline of leases is expected to close in early 2017, partly reversing that trend.
But developers Downtown are now building 2.8 million square feet of office space, all at the World Trade Center. Vacancy rates in the fourth quarter averaged 10.4%, with asking rents averaging $70.22 per square foot, according to JLL.
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