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January 17, 2011

Office vacancies grow in boroughs outside Manhattan

The office market in Brooklyn and Queens and on Staten Island is still struggling to recover

Crain's NY Business
by Amanda Fung

Whether you call it "Miss Brooklyn," "B1" or vaportecture, the market for Bruce Ratner's proposed Atlantic Yards office tower is non-existent.

The office market in Brooklyn and Queens and on Staten Island is still struggling to recover.

Those areas, whose collective net space absorption was negative throughout 2010, posted their highest level of negative absorption in the fourth quarter, according to CoStar Group's latest report on the boroughs beyond Manhattan (not including the Bronx). In all, 564,930 more square feet of space was put on the market than was leased during those three months, even as Manhattan racked up positive absorption of 2 million square feet.

Accordingly, the office vacancy rate for the three boroughs jumped to 8.1% in the last quarter, from 7.2% in the previous period.

“The outer boroughs clearly have some issues,” said Chris Macke, senior real estate strategist at CoStar.

Downtown Brooklyn saw the largest setbacks: NYSE Euronext moved out of roughly 387,000 square feet at 2 MetroTech Center, and J.P. Morgan Chase left about 352,000 square feet at 4 MetroTech. Since the market in the boroughs beyond Manhattan is so small, with just 67 million square feet of rentable office space, those departures put a relatively big dent in the figures, Mr. Macke noted.

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Posted by eric at January 17, 2011 9:20 PM