Slow, Steady Growth Unlikely to Crash Office Rents
The market for office space Manhattan is not acting like a boom market about to crash.
“A sharp decline in the next downturn is unlikely,” according to the latest research and analysis from Jones Lang LaSalle. “There is always, eventually, a next economic downturn — but the growth in office rents has simply not sped up enough so far to crash very hard.”
So far in the current expansion, Manhattan office rents grew at a slow, steady compound annual growth rate of 4.5%. Just to compare, in the expansion before the crash in 2000, Manhattan office rents grew at a frantic compound annual rate of 13.8%. In the expansion before 2008, that rate was 13.5%.
Also, rents for office space in Manhattan grew in 18 of the last 23 years. That’s an indication that any possible decline in rents would be short lived, according to JLL.