Manhattan Office Market Has Its Strongest Quarter Since Late 2019: Report
Manhattan’s office market seems to be rebounding after a rough 18 months of the pandemic. Colliers (CIGI)’ third-quarter market report finds that office leasing volume in the borough jumped 60 percent since last quarter.
It was Manhattan’s strongest quarter of office leasing since late 2019, at 7.2 million square feet of deals signed. Leasing volume was up 50 percent year over year—from what would have been a pandemic nadir last summer—but still 12 percent below the five-year rolling leasing average of 8.2 million.
Average asking rent was $73 a square foot, which was the lowest quarterly average since 2017 and down 8.5 percent since the pandemic began in March 2020.
While the office availability rate improved slightly during the third quarter—from 17 to 16.8 percent—the amount of available office space in Manhattan has increased 68 percent since March 2020. During the third quarter, net absorption of office space was positive for the first time in two years, at 870,000 square feet. Still, total net absorption since March 2020 was a negative 36 million square feet.
Office leasing volume increased since the second quarter across all three major submarkets in Manhattan, with Midtown leading the pack with a 73 percent annual gain. The biggest transactions included Crédit Agricole’s 167,000-square-foot lease at 1301 Avenue of the Americas and BDO USA’s 143,000-square-foot lease at 200 Park Avenue. Moving downtown, leasing volume was up 60 percent in Midtown South and 36 percent Downtown.
“As the Manhattan market continues its post-pandemic recovery, the critical milestone of demand outpacing supply was reached this quarter,” said Franklin Wallach, Colliers’ senior managing director of research. “As a further encouraging sign of the office market’s recovery, the highest daily subway ridership since the pandemic began was recorded in September. However, millions of square feet of space added since March 2020 remains available while more supply is scheduled to enter the market in the coming months, creating pressure on this healthy demand to not only continue, but increase.”
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