Manhattan Office Space Disappearing

Office-leasing activity in Manhattan dropped in 2007, suggesting a slowdown in a once furiously fast-paced market. In the fourth quarter of 2007, companies leased slightly more than 5 million square feet of office space, less than in each of the previous three quarters, according to a report out today from brokerage Cushman & Wakfield. Leasing dropped 12.8 percent for the year from 2006.

Other highlights of the report show a generally strong office market, despite the drop in leasing activity--which itself was not unexpected, given the lack of available space due to that earlier, more furious leasing pace. The total available office space in Manhattan measured 22.2 millions square feet by the end of 2007, the lowest amount since the start of 2001.

Meanwhile--and not coincidentally--the asking rents for that office space increased throughout 2007 in every submarket. In midtown, the leading submarket (in the city, if not the United States), the averaging asking rent finished 2007 at $76.26 a square foot, up from $69.08 at mid-year. The overall rent for Manhattan office space averaged just over $65 a foot by year's end, up from $59.17 at mid-year.

The Observer will have more on the state of the office market in tomorrow's paper.