NYC office rents seen rising 16% through 2013

Manhattan commercial asking rents will advance 16% over the next three years, the second biggest gain in the nation, according to a forecast released by Cushman & Wakefield Inc. on Thursday.

Only San Francisco, where rents are expected to jump 33% through 2013, will best New York, the report said.

New York is benefitting from a much stronger job market than many cities in the country, said Maria Sicola, head of research for the Americas at Cushman. She said that in New York, 40% of the jobs lost during the recession have come back.

Midtown south and midtown are the driving forces behind what is expected to be the city’s exceptional performance. Midtown south’s vacancy rate of 8.6% was the lowest for any central business district in the country last year. By 2013 it is expected to fall to a mere 4.4%, which would also rank as the smallest in the nation. Rents in the neighborhood are expected to increase 22% over the next three years.

Ms. Sicola said that midtown south’s older buildings, many of which have high ceilings and exposed brick walls, are especially popular with tech firms that are seeking space.

Meanwhile, rents in midtown are projected to move up 17% in the period and the vacancy rate should fall to 7.5% from 10.6% last year.

Downtown will continue to lag its brethren, according to the report. The vacancy rate is expected to increase to13.5% by 2013 as One World Trade Center is completed. It is currently at 11.5%. Rents are expected to grow 7% to $41.38 a square foot.