The biggest banks and security firms in New York may relinquish this year more than eight million square feet of office space, deepening the current slump on commercial properties in more than a decade.
Citigroup, JPMorgan Chase and bankrupt Lehman Brothers Holdings as well as several industry rivals have vacated 4.6 million square feet of office space, a figure that can still reach to another four million square feet as businesses close, said CB Richard Ellis Group, a commercial property firm.
Banks, insurers and brokers have removed over 177,000 employees in the US as the credit crisis and global recession have greatly affected the balance sheets.
As shown in data released by CB Richard Ellis, financial services firms cover 362 million square feet of office space in Manhattan and an account of over 40 percent office space is now available for sublease.
“Entire segments of the industry are gone. We’re talking about the end of 2012 before things actually start to turn up again for the New York office market,” said Moody’s Economy.com’s Senior Economist Marisa Di Natale, who is based in West Chester, Pennsylvania.
The amount of sublease spaces could reach to 15.6 percent at the end of the year, according to LA-based CB Richard Ellis. Vacancies are at the highest peak since 2004 and rentals are down to 5 percent, the highest drop for two decades.
New York City had 14.8 million square feet available space in 2003 and if CB Richard Ellis predicted accurately, 2003’s record will be broken.
Figures of CB Richard Ellis do not include the relinquish space from the Bank of America at lower Manhattan, where the security firm Merrill Lynch & Co that it purchased last month occupies 2.8 million square feet.
The Bank of America plans to relinquish 530,000 square feet at 9 West 57th Street as it moves to 1 Bryant Park. Goldman Sachs Group is also leaving 1.3 million square feet of office space at 77 Water Street and 1 New York Plaza as it moves to its new headquarters.