The financial services industry makes up nearly a third of all income in the city and 12 percent of its employment. Through August, the sector shed almost 103,000 workers worldwide, according to Challenger, Gray & Christmas. That total doesn't include the likely rounds of layoffs coming from investment banks Merrill Lynch and Lehman Brothers.
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The vacancy rate for Manhattan commercial real estate hit a two-year high of 7.4 percent in the third quarter, up 30 percent from the year-ago period, according to a report last week by Cushman & Wakefield. The firm predicted the vacancy rate could rise as high as 9 percent to 10 percent by the first quarter of next year.
August leasing activity in the Midtown area trailed the five-year monthly average by 41 percent, and the Downtown area, by 71 percent, according to CB Richard Ellis. Average asking rents are starting to fall in both areas, and vacancy rates are inching higher. Landlords are offering more concessions to appease tenants.
"I did hear of a transaction pending where the landlord dropped the rent by $10 per square foot on a $100-plus per-square-foot rent to entice the tenant to stay," said Steve Siegel, chairman of global brokerage for CB Richard Ellis.
Rents, which have doubled since 2003, could lose as much as 23 percent, Gosin predicts, but believes the city's market is resilient and will bounce back better than expected.
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