Wall St fallout hits Manhattan offices

The Manhattan offices market will shake off the effect of Bear Stearns fire sale but estate agents warn that another shock from Wall Street could send rents into a tailspin.

The average asking rent for prime midtown offices is now just $84.65 (£42.48) a square foot. In contrast, prime rents in London's West End have topped £120 a square foot in recent times.

Estate agents say the sudden disappearance of Bear Stearns, the fifth-biggest investment bank, with its thousands of employees on Wall Street, will have a major impact on the city's property market.

"The real test is how big are the ripples from this and how far are they going to extend," said John Houck, senior managing director of Weiser Realty Advisors.

Rents are already flat and values falling.

The fortunes of Manhattan's office market revolve round financial services firms, which occupy more than 35% of the city's 391 million square feet.

At the end of February, Manhattan's overall vacancy rate stood at 5.8%, but it was 6.1% for the high-quality mid-town buildings that financial tenants prefer, according to property broker Cushman & Wakefield.