The economic volatility of 2008, climaxed by the credit crisis that intensified after the bankruptcy of Lehman Brothers in September, has reversed the boom enjoyed by the Manhattan office market in the immediately preceding years. This paper places the current downturn in the context of prior cycles: 1984 – 1992; 1993 – 2001; and 2002-present.

In each cycle, Wall Street has been a key demand force with its employment count fluctuating between 150,000 and 200,000 at troughs and peaks. As a fundamental driver for New York, though, Wall Street’s multiplier effect in total office jobs magnifies the impact of its swings. The authors trace this history and conclude that approximately 37,500 jobs will be shed in the securities sector by 2010, part of an aggregate loss of about 75,000 Manhattan office jobs.

Over 17 million square feet of additional vacancy will hit the market in this decline, pushing the vacancy rate as high as 12.3%. Recovery is projected for 2011, with a modest uptick in financial jobs stimulating positive space absorption again.