NEW YORK - The year 2005 was generally a good one for both sides of the Manhattan office market.
Vacancy rates declined, and that was good for building owners. And rents increased, but at a restrained pace, so those looking to lease space were generally not under intense price pressure.
In short, many real estate executives say, neither tenants nor landlords currently have the upper hand.
“We are at the sweet spot now, with a balanced marketplace,” said Paul Glickman, an executive vice president of Cushman & Wakefield, a brokerage and services company. “Equilibrium state is usually defined as a vacancy rate between 7 and 9 percent, and that is where we are.”
According to statistics supplied by C.B. Richard Ellis, another brokerage and services company, at year-end the vacancy rate was 9 percent for Midtown and 8.6 percent for Midtown South.
But a sharply higher vacancy rate of 14.1 percent in the downtown market, defined as the area south of Canal Street, helped to raise the year-end average for all of Manhattan to 10.1 percent.
Still, that was noticeably better than in 2004, when the average vacancy rate was 12.6 percent.
Real estate executives said the improvement in the leasing market was driven by an improving economy in the city and growth in the number of office jobs.
Since companies that expect to be hiring people often lease space in advance, the real estate effect is often felt before the actual job creation.