percent for the year. The Q1 vacancy rate sat unchanged from Q4'06 at 12.55 percent – but registered slightly down from a rate of 13.25 percent during the year-ago quarter.
"Don't be fooled by a somewhat disappointing first quarter," cautioned Ross Moore, senior vice president and director of market & economic research at Colliers International. "While absorption was well below levels experienced over the past couple of years, nearly all markets continue to clock steady demand. Absorption is almost certain to bounce back - if not during Q2, then in the latter half of 2007. In fact, despite this faltering absorption, rents remain on the rise, in line with an upward trend started early last year."
Yet again, rents increased during Q1, with downtown lease rates rising particularly sharply. Downtown asking rents jumped 5.2 percent during Q1 to reach a record high of $43.22 per square foot (psf), led by Midtown Manhattan. Suburban rents increased 1.7 percent to $26.27 psf. This left downtown rents up 11.9 percent over the year, while suburban rents increased by 7.7 percent.
A few more markets (10 compared with 6 at the end of Q4'06) anticipate less demand for space during the second quarter - while the clear majority have forecasted steady if not rising demand in their market. As for new construction, completions totaled 15.3 msf during the first
quarter, compared with 16.3 msf in Q4'06; and year-ago completions totaled 17.4 msf. Another 119.2 msf is currently under construction, most of which is anticipated to be completed in the next 18 months. 106.9 msf was under construction during Q4'06, as compared with 82.9 msf in the year-ago quarter.
