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Midtown Manhattan Office Vacancies May Hit 25%, Brokerage Says

2009-03-05 23:10:50.126 GMT

By David M. Levitt

March 5 (Bloomberg) -- Midtown Manhattan office vacancies
may rise to 25 percent by 2012 as companies cut jobs, property
broker TenantWise said in a report.

“Substantial and escalating amounts of prime office space
are unused and unneeded,” the firm said. “Government-funded
subleases are causing the unprecedented and citywide collapse of
commercial property values.”

The federal Troubled Asset Relief Program is helping drive
commercial rents down by enabling tenants to offer office space
for sublease at as much as a 79 percent discount, TenantWise
said. That helps drive down both rents and property values in
Manhattan, the report said, calling it an “unintended
consequence of TARP funding.”

TenantWise’s vacancy projections are higher than those of
some competitors. CB Richard Ellis Group Inc. projects an
availability rate -- vacancies plus expected vacancies -- of 15.6
percent by the end of the year, the highest since 1996. CB
Richard Ellis is the world’s biggest real estate services firm.

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