By Peter Shakalis

This is especially the case when one considers what happened during the last down cycle in the economy in 2001. While that previous recession ended by the final months of 2001, the amount of available space in the city continued to rise through 2002 and peaked in mid-2003.

However a new hit to business confidence could precipitate a decline in office space required by corporate tenants, pushing the availability rate higher. Additionally the completion of about 3 million square feet of new office space in late 2009 and early 2010 represents a possible risk to continued stability of available space. The consolidation of Goldman Sachs offices into its new building in the Downtown market near to the World Trade Center represents about two-thirds of that new space.

Several related but different factors account for the fact that the overall availability rate has held steady in the third quarter. First, the amount of office spaced leased as measured in square feet did increase during the third quarter. The average monthly figure was almost 2 million square feet, based on the preliminary numbers for the third quarter. The second quarter’s average was 1.4 million square feet, and an average of just 1 million square feet in the first quarter. While the amount of space leased improved, the amount being offered on the market also declined in the third quarter. This applied to sublet space on the market as well.

A sense that the economy had found bottom and that business would eventually improve seems to have became the consensus view in the third quarter. This change in attitude has prompted some office tenants to complete their space searches or to hold onto space that was only partially utilized. Property tours also seemed to have increased over the level in the first and second quarters of 2009.

---

Peter Shakalis is a Director at
FirstService Williams Real Estate
pshakalis@fswre.com