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October 2, 2015- Consistent with our essay “If you build it, they won’t come“, Observer reports, “Despite some high-profile relocations Downtown in the third quarter, the submarket’s vacancy rate jumped almost 9 percent from the same time a year earlier, a JLL report provided first to Commercial Observer shows.
The vacancy rate increased 8.5 percent overall to 11.5 percent for the third quarter from 10.6 percent the same time a year earlier. For Class A office space, the rate increase is even greater with a year-over-year jump of 10.7 percent to 12.4 percent. The submarket covers Manhattan south of Canal Street.
A massive 1.8 million square feet coming online at 1 Chase Plaza and 375 Pearl Street, parts of which have been repositioned from data centers to office space, pushed the vacancy rate up despite the signing of high-profile leases, according to John Wheeler, JLL’s Downtown expert.
“That’s a pretty big slug of new inventory,” Mr. Wheeler told CO, adding that leasing activity for the last quarter was still strong. The third quarter of 2014 included Time Inc. and the Hudson’s Bay Company’s deals to relocate to Brookfield Place, which came to a combined 1.1 million square feet. “You can’t get to the point where you’re expecting that to happen every year.””