The Manhattan office market, far and away the largest in the United States, is showing signs of strain under the weight of the ills suffered by the financial sector, according to real estate services company Cushman & Wakefield.
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(Reuters) -- Asking rents for Manhattan office space in second quarter 2008 rose 6.6 percent from the first quarter and 21 percent from a year before to $71.59 per square foot. But those numbers don't reflect non-published rates -- accounting for free rent and tenant improvement costs -- especially among those renters who are subleasing space they don't want. Several Cushman & Wakefield leasing brokers said that anecdotally the difference between asking rent and effective rent is gaping to 15 percent, up from 5 to 10 percent last year. "I think landlords and subleases are putting on a brave front," said Franklin Speyer, vice chairman, Midtown office leasing. "They will take and are offering much larger amenities." Landlords are reimbursing tenants for more of the cost of the improvements to their space -- now about 40 to 45 percent, up from 30 to 35 percent, said Gus Field, executive vice president of Midtown office leasing. They are offering six to eight months of free rent on signing a lease, up from three or four last year, he said. The published numbers showed that overall vacancy in Manhattan is 7.1 percent, up from 5.3 last year to its highest level since the third quarter of 2006.
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