New leasing activity in October for existing Manhattan office buildings was the lowest one-month total over the past 27 months, with only 1.5 million square feet leased. Despite this slowdown, the leasing totals for the financial services sector have been strong through the first 10 months of the year and are on pace to finish the year at the highest level since 2011. With 4.6 million square feet of new leases signed this year, financial services firms already leased 12.2 percent more space than all of last year. A major contributor to this increase is the growth in employment for this sector, as 21,200 jobs were added over the last 24 months. Despite this sector’s addition of 35,000 jobs since its all-time low in January 2010, job levels are still 2.5 percent below the peak during the previous expansion cycle in November 2007.
This increase in employment has led to a switch in the top two industries to lease space this year, as the financial services sector accounts for 30.5 percent of the square footage leased this year. This is a significant increase compared to 2012-2014, when this industry accounted for an average of only 21.8 percent of the new leases signed. In addition, it is the highest percentage leased by this industry since it accounted for 31.5 percent of new leases in 2007.
After accounting for 33.6 percent of the square footage leased in 2014, the TAMI (technology, advertising, media and information services) sector has dropped off so far this year to only 21.3 percent. Professional and business services round out the top three and account for 14.7 percent of the new leases signed in 2015. Within this industry, legal services accounted for 9.9 percent of the activity, which is up from the previous three-year average of 8.2 percent.