by Calculated Risk on 8/06/2008 09:32:00 PM

From the NY Sun: Commercial Rental Rates Plummet in Manhattan

The slowdown in the real estate market is finally hitting New York office space ... Asking rent declined 2.2%, to $69.29 a square foot, while Class A rents plummeted 4.4%, to $90.65, according to Studley's second-quarter market report ...

Meanwhile, the availability rate jumped half of a percentage point, to 8.2% — nearly a full percentage point higher than a year ago. ... the supply of sublet space is increasing, up 34% versus the prior quarter, to 8.3 million square feet.

Sublease space really hurt the NY commercial market in the previous downturn, and it appears to be happening again.

And all those CMBS - with the assumed yearly rent increases - are about to discover what happens when vacancy rates rise and rents decline.

Click on graph for larger image in new window.

Most of the CMBX indices are near new record lows again.

Note: Up is down for the CMBX indices. The CMBX is quoted as spreads, whereas ABX is quoted as bond prices. When the spreads increase - chart going up - the bond prices are going down.

This graph is the CMBX-NA-BB-4 close today.