New York City’s commercial real estate market is still feeling the effects of a horrible economic downturn, with approximately 920 football fields of available office space in Manhattan in more than 180 major buildings totaling $12.5 billion in value.
From Columbus Tower at 1775 Broadway to the office tower at 400 Madison Avenue, many office buildings face foreclosure or bankruptcy or have had significant difficulties making mortgage payments, according to The New York Times. Not helping the situation is the fact that rents for commercial office space has fallen faster over the past two years than in any such period in the last half century, according to the report.
Some believe the situation hasn’t hit bottom yet, either. “More than half a dozen experts on commercial real estate in New York City said that despite some flickering signs of economic recovery here and elsewhere in the country, the universe of big buildings and giant apartment complexes has further to tumble.” Vacancy rates are expected to rise while rents will likely lower.
Some experts, however, are trying to see the bright side, seeing this as an opportunity to get some great bargains in the commercial real estate market. They are indicating how some investors have already done this in London, and they may be quickly turning their attention to Manhattan later this year to find deals, “fueling some growth in overall sales.”
Despite this potential upside to the situation, “most members of the real estate industry are lockstep in their pessimism.” They note that the first thing that needs to happen is for jobs to recover so that there are people to actually fill the offices, and lately job growth in New York City has been lacking. Apart from Chicago, Washington, and Boston, New York City has become “stuck with more available office space than any other central business district in the nation.”
The bottom line that most experts and laymen seem to agree on is that nothing is going to change until the job market recuperates and people begin to feel more comfortable moving forward.