Office Leasing in Manhattan Drops 40 Percent From September to October

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As if Halloween wasn’t scary enough, Manhattan’s office market just got a little more terrifying.

Manhattan saw 1.59 million square feet of office leased last month, a 40 percent drop from September and the lowest monthly total since May 2021, according to a report from Colliers

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The borough’s availability rate also increased 0.4 percentage points month-to-month to 16.8 percent, the biggest increase since December 2021, as several high-profile companies cut back on their office space.

Despite the grim October, this year has looked a bit better than last for Manhattan leasing. So far, the borough’s had 25.77 million square feet of leasing activity, an increase from the 19.03 million during the same time last year, according to the report. 

And Colliers’ Franklin Wallach cautioned against reading too much into just one month since one or two big leases can turn a negative month into a positive one.

“Leasing activity can absolutely change by a large degree in any given month, and one or two large deals always have the potential to move the needle,” Wallach said. “It’s difficult to draw any sort of long-term conclusions [but] you can certainly point to the lack of those large deals for the numbers seen this month.”

Midtown, Midtown South and Downtown all felt the absence of those big deals. Midtown saw 580,000 square feet of leases signed in October, an almost 50 percent decline since September and a 61 percent drop from October 2021. 

Downtown had 240,000 square feet of space signed in October, a 25 percent drop from September and 44.2 decrease compared to 2021. And Midtown South’s 770,000 square feet was nearly a third down from September to October, though the neighborhood almost matched the 780,000 square feet of deals it saw last October, according to the report. 

Midtown South was home to Manhattan’s three biggest transactions: software company Medidata Solutions177,000-square-foot renewal at 350 Hudson; The Fedcap Group’s 85,000-square-foot lease, and internet marketer Rokt’s 33,860-square-foot expansion at 175 Varick Street.

And larger deals are likely coming in November and December, which tend to see stronger leasing as companies rush to get their offices squared away before the new year, Wallach said. Plus, Manhattan has seen fairly strong demand so far this year.

“In certain segments of the market and in certain periods of 2022, demand outpaced supply and the market was able to chip away at the millions of square feet of negative absorption it experienced over the last two and a half years,” Wallach said.

Celia Young can be reached at cyoung@commercialobserver.com