Manhattan Office Lease Expirations in 2022 Cover Nearly 34M SF
But that's no cause for alarm necessarily
An estimated 15.75 percent of active Manhattan office leases covering more than 33.9 million square feet — 2,031 leases total — will expire in 2022. That accounts for 9.49 percent of leased office space in Manhattan, according to numbers from Moody’s Analytics provided for Commercial Observer.
While such figures might look bad for a market already struggling with unusually high vacancy rates, they are not that dire. Why not to worry?
First of all, smaller shares of leases will expire in 2023 and 2024, according to Moody’s estimates: 13.23 percent in 2023 and 13.63 percent in 2024. Second, the volume of space these estimated shares comprise — each roughly around 29.7 million square feet — is smaller than 2022’s volume. And these 2023 and 2024 volumes constitute a smaller share of overall active leases — roughly 8.3 percent each year.
Finally, the last reason not to sweat these expirations is that they are just that: ends of leases. The tenants behind them might very well renew in the same locations for the same amount of space, if not more. (Leasing has picked up in Manhattan lately.)
No, what landlords and brokers should worry more about is the volume of new office space spilling into Manhattan in the next few years. Leasing will be a far bigger challenge in a post-COVID-19 world where hybrid work models will likely dominate, with fewer workers coming in every day and lots of space sitting vacant. That will mean more spending by owners on amenities and other sweeteners to draw and retain tenants.
More than 11.47 million square feet of new, non-owner-occupied office space is expected to become available in Manhattan through 2024, according to another Moody’s analysis. That includes 6.45 million this year.
Tom Acitelli can be reached at firstname.lastname@example.org.