Stat of the Week: 58.1 Percent
As 2016 is officially in the books and Real Estate Board of New York holds its 121st annual banquet this week, let’s examine how lease renewals dress up the leasing statistics from last year. Despite 26.3 million square feet of new leases signed throughout Manhattan, 2016 leasing totals fell short of 2015 by 6.7 percent. The drop off in new leases was boosted by an influx of lease renewals, as almost 9.1 million square feet was renewed, up 58.1 percent compared with 2015. This brought total leasing activity to over 35.3 million square feet—a 4.2 percent increase year-over-year, as 2015 total leasing only reached 33.9 million square feet. Lease renewals accounted for only 16.9 percent of the total leasing activity in 2015 but took the market by storm in 2016 with 25.6 percent of all activity, slightly above the historical average of 22.1 percent.
Midtown new leases reached 17.8 million square feet in 2016, down 3.7 percent compared with the prior year. Lease renewals were up in Midtown, with over 6.1 million square feet renewed, marking a 33.7 percent increase year-over-year. Combined, new leases and renewals brought the total leasing for Midtown to over 23.9 million square feet, a 3.7 percent increase from 2015. Of the nine Midtown submarkets, the East Side/U.N. had the highest percentage of renewals at 40.9 percent.
Midtown South followed the same trend with new leasing activity reaching only 4.9 million square feet, a 5.7 percent year-over-year decline. Lease renewals totaled 926,914 square feet, nearly twice the amount renewed in 2015, bringing the 2016 total leasing numbers to 5.8 million square feet, 2.6 percent above 2015. The Hudson Square/West Village submarket had the highest ratio of renewals in Midtown South during 2016 with a 33.7 percent renewal rate.
Downtown suffered the biggest drop in new leasing activity, down 20.4 percent with 3.5 million square feet leased. Lease renewals totaled 2 million square feet and were almost three times the amount renewed in 2015. This led to the largest year-over-year increase in total leasing activity, up 8.6 percent at 5.6 million square feet. At 51.4 percent, the Financial East submarket had more than half the square footage leased in 2016 come from renewals, mostly attributed to McGraw Hill’s 900,027-square-foot renewal.