Manhattan Leasing Volume Remains Strong But National Figures Rocky
By Mark Hallum September 2, 2022 1:08 pm
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Manhattan leasing volume is the best it has been since January 2020, but the rest of the country hasn’t been faring as well.
Leasing volume in Manhattan saw a 7.8 percent increase in activity in August compared to July and a 39.5 percent jump year-over-year, according to a report from Colliers (CIGI).
Volume was even looking good for Downtown, which saw 510,000 square feet of space leased last month, despite firms fleeing for Class A buildings in Midtown lately in an effort to coax workers back to the office, the report found.
“As the Manhattan market recorded its sixth consecutive month of positive absorption, we’re beginning to see a trend of demand outpacing supply in pockets of the market,” Colliers head of research, Frank Wallach, said in a statement. “However, with an availability rate of 16.7 percent, the market still has a ways to go before returning to the pre-pandemic 10 percent [vacancy] rate.”
One of the leases influencing these figures was the relocation of the U.S. office for Freshfields Bruckhaus Deringer, which signed a 15-year lease for 180,000 square feet at 3 World Trade Center with landlord Silverstein Properties, according to Colliers. The law firm will be vacating its Midtown offices at Boston Properties-owned 601 Lexington Avenue.
But inflation, rising interest rates and concerns of a possible recession took its toll on the national leasing market with demand for office space plummeting 17.5 percent from June to July, according to a report from VTS.
The VTS Office Demand Index showed that national demand fluctuated from 63 in June to 52 in July and remains just over half of its average pace in 2018 and 2019.
New York City, Chicago and Boston saw the highest setback in demand due to the concentration of office use in the sectors of finance, insurance and real estate, according to the VTS report. Rising interest rates have a greater effect on the financial outlook for these industries than tech in cities such as San Francisco or Seattle, which showed greater stability in terms of employment numbers and office leasing, according to VTS.
VTS did not immediately respond to a request for comment.
Mark Hallum can be reached at mhallum@commercialobserver.com.
