Leasing activity reached 37.9 million square feet in Manhattan in 2013, an 18.4 percent increase compared to 2012. There was a surge of activity in the fourth quarter as 13 million square feet were transacted. The surge was led by 27 leases greater than 100,000 square feet being signed in the fourth quarter alone, which brought the 2013 total to 58. The influx of large leases ended a 15-year trend. From 1998 to 2012, an average 80.5 percent of all leases signed were 20,000 square feet or less, but in 2013, that number was reduced to 73.9 percent.
Renewals continued to play a major role in the leasing velocity and accounted for more than 38 percent of the square footage transacted for the second consecutive year. Sublease activity was up in 2013 and totaled 3.7 million square feet; this was an increase of 76 percent from 2012 and supports the trend that tenants remain value-driven.
Midtown’s total leasing activity reached 22.0 million square feet in 2013, up 12.3 percent from 2012. Renewals accounted for 42.2 percent of the market’s leasing activity, while 2.6 million square feet of subleases were signed in Midtown.
Midtown South had the largest increase in leasing activity from 2012, as 8.5 million square feet of leases were signed in 2013. This was an increase of 31.9 percent, which was fueled by 4.1 million square feet of renewals. Renewals accounted for almost half the activity in Midtown South, which was inflated by the 2.6-million-square-foot renewal by Citi at 388-390 Greenwich Street.
Downtown Manhattan leasing activity was the lowest of the three markets but actually made the biggest statement. A total of 7.4 million square feet was transacted in 2013, but renewals constituted just 16.2 percent of deals. With leasing activity up 19.5 percent from 2012, more than 6.2 million square feet of new leases were signed downtown. This adds further support to the trend of lower Manhattan being in demand among tenants looking to save on real estate expenses.