January 16, 2013 at 13:34 PM EST
Sixth Avenue vacancies near 20-year high
AXA Equitable is casting a huge 400,000-square-foot block of Sixth Avenue office space on the market as a long term sublease. It becomes just the latest in a series of large spaces to hit what increasingly is a glutted market on the avenue. The giant Manhattan-based life insurance company has over 500,000 square feet at 1290 Sixth Ave., between West 51st and West 52nd streets, but plans to vastly shrink its operations there and shift employees to locations it has on the far side of the Hudson River in Jersey City, several sources familiar with the company's plans say. The sublease stretches for 10-years, making it competitive with the long list of spaces being offered directly by landlords in the area. "If you look at what's going on in the economy right now, it's affecting corporations and their decision making and Sixth Avenue is the home of the large corporate user," Ken McCarthy, Cushman & Wakefield's chief economist, said. "They're the ones being cautious right now. They're not leasing spaces and in some cases they're giving space back." Mr. McCarthy said that 6th Avenue had the poorest absorption of office space of any submarket in the city last year. He noted that about 550,000 square feet of space added to the market there in 2012. Sixth Avenue's vacancy rate currently stands at 10.7%, but that figure is expected to swell to 13.8% in coming months as a number of big tenants make planned cuts or moves. That would be the highest vacancy rate seen on that avenue in nearly 20 years, Mr. McCarthy said. Among the likely vacancies looming on the horizon are a number of major blocks of space. The Internal Revenue Service could give up nine floors totaling roughly 250,000 square feet at 1133 Sixth Ave., according to sources. The British media outfit Pearson will also be leaving, relocating from about 150,000 square feet at 1330 Sixth Ave. to Hudson Square in the coming months. On top of all that, Microsoft reached a deal early this month to leave 1290 Sixth Ave. and move into 200,000 square feet at 11 Times Square. Those spaces will add to several major blocks that have lingered in the neighborhood for months. The French financial company Societe Generale left behind about 400,000 square feet at 1221 Sixth Ave. over a year ago. Dewey Laboeuf, the law firm that went bankrupt last year, cast about 470,000 square feet on the market at 1301 Sixth Ave. Brokers fear that even more space could come. Morgan Stanley, which has hundreds of thousands of square feet at 1211 Sixth Ave., has signaled major layoffs that could cause it to shrink or even eliminate its presence in that building. Publisher McGraw Hill has also hinted according to sources that it may put space on the sublease market at 1221 Sixth Ave.
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