Wall Street layoffs could reach 36,000
April, 24, 2008
A new estimate from the state Department of Labor puts the possible job cuts on Wall Street at nearly double the previous estimates. In an interview with Reuters, James Brown, a market analyst for the state agency, predicted that Wall Street would lay off a stunning 36,000 employees -- one fifth of its entire work force. That compares to the 20,000 that the city's Independent Budget Office predicted in March.
The bleaker outlook would not only put a damper on the city's economy, but it could also hinder Manhattan's commercial leasing market in the coming year.
If the cuts come to pass, Manhattan could see up to 9 million square feet of office space, direct and subleasing, dumped back on the market, according to James Delmonte, vice president and director of research at Jones Lang LaSalle. To get to that figure, Delmonte estimates an addition of 200 to 250 square feet for every employee.
If that space does, in fact, get reintroduced to the market, the vacancy rate would climb to about 9.7 percent, from its current level of 7.9 percent. The figure is above the 9 percent threshold where asking rents begin to fall, according to Delmonte.
He points out, however, that 9.7 percent is still slightly below the vacancy that Manhattan saw in 2002 and 2003, and that the market will fare better this time around.
"Back in 2001 and 2002 there were several factors that impacted the market: troubles in the financial services, a correction in the technology sector, as well as September 11th," Delmonte said.