Manhattan Ends 2021 With Office Leasing Surge
Manhattan leasing built on trends of increased commercial leasing throughout 2021, with the fourth quarter showing the most activity since late 2019, according to two new reports from Colliers (CIGI) International and Newmark.
The borough saw more than 8.6 million square feet leased in the fourth quarter, a 19.3 percent spike compared to the previous quarter and double the 4.16 million seen in the last three months of 2020, according to the Colliers data. The Newmark (NMRK) report put these figures closer to 8.3 million square feet of activity with growth of about 20.9 percent.
But, even though the market has made strides since the pandemic hit, Manhattan’s 2021 leasing volume for the full year was still 41.9 percent lower than the pre-pandemic numbers seen in 2019.
While the 25 million square feet leased in total in 2021 was down compared to 2019 levels, it still amounted to a 31.6 percent jump compared to the prior year and marks the strongest yearly growth since 2013, Colliers data show.
Both firms released their reports on Monday with Colliers data indicating the strength of the financial services, insurance and real estate industries, with them accounting for the most leasing activity in Manhattan at 35 percent of deals. Technology, advertising, media and information (TAMI) services followed closely behind at 30 percent.
Franklin Wallach, senior managing director of research at Colliers, previously told Commercial Observer that these numbers must be taken into account with the amount of new office space that has been built since the pandemic began, an increase of 72.2 percent since March 2020 to a total of 92.7 million square feet.
“The fourth quarter provided key indicators of the Manhattan office market’s resolve,” Wallach said in prepared remarks on Monday. “Demand was the strongest in two years, sublet supply tightened for the third consecutive quarter and the asking rent average surpassed pre-pandemic levels in pockets of the market. However, opportunities for tenants still exist with nearly 40 million square feet of added supply since March 2020 hampering the recovery.”
Newmark found the availability rate was stable at 18.5 percent as additions to the market in Midtown —specifically 66 Hudson Boulevard, 2 Manhattan West and PENN 2—were offset by large deals in Midtown South and Downtown.
“Market conditions improved throughout the year, providing the fourth quarter with momentum it had not seen since early 2020 as strong demand helped to drive leasing in top tier buildings and those close to transportation,” Jonathan Mazur, senior managing director of research at Newmark, said.
Some of the deals downtown included Verizon’s 140,000-square-foot lease at Essex Crossing, Brown Brothers Harriman & Co.’s 190,000-square-foot renewal at 140 Broadway (the largest Downtown deal of the quarter) as well as Orchard Technologies, which notched the largest relocation of the quarter with 107,395 square feet at 195 Broadway.
Average asking rent increased by 3.1 percent during the last three months of 2021 to $75 per square foot, according to Colliers. (Newmark placed this average at around $76.86 per square foot.)
Fourth-quarter activity saw significant help from 13 individual leases signed for more than 100,000 square feet, 11 of which were in Class A buildings as flight to quality played a major role and deals in “trophy product” spaces experienced an increase of overall velocity from 7.7 percent in 2020 to 13.1 percent in 2021.
Mark Hallum can be reached at firstname.lastname@example.org.