Through July, 19.2 million square feet of property has been leased, subleased and renewed in the Manhattan office market. Compared to last year, leasing activity is up 6.3 percent—not a shattering improvement, but still movement in the right direction.
New leases accounted for 55.8 percent of the leasing activity year-to-date, while renewals and subleases accounted for 35.7 percent and 8.5 percent respectively. Lease renewals started off the year strong—accounting for 42 percent of the market activity in the first five months—only to drop off in the last two months.
One reason for this could be the slowdown in large lease transactions; through May 25, leases for 100,000 square feet or more were completed; a majority of them were renewals. In June and July, however, only two such leases were announced. But fret not, a few large leases will surely be announced by the end of the third quarter.
Leading the way for the three major markets is Midtown, with leasing activity involving 12.5 million square feet through July. Ranking the three markets by leasing volume is not fair since Midtown is nearly three times the size of both Midtown South and Downtown.
But if one were to consider the leasing activity as a percentage of the total market size, Midtown would still rank No. 1. Midtown had 4.9 percent of its inventory leased, followed by Downtown with 4.1 percent and Midtown South at 3.8 percent. Lease renewals account for 43.4 percent of the leasing activity in Midtown, as Midtown South (26.8 percent) and Downtown (16.5 percent) continue to attract new value-driven tenants.