Leases  ·  Industry

Manhattan Office Leasing Notches Highest Total Since 2019: Report

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Manhattan’s office market kicked off 2023 with a bang.

Tenants inked deals for 4.4 million square feet in the borough in January, in the strongest single month of leasing Manhattan has seen since 2019, according to a report from brokerage Colliers

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Midtown led the surge in deals and saw its availability rate drop from 15.5 percent in December to 15.4 percent in January — the only Manhattan neighborhood to post a decrease in its availability rate. 

“This was a noteworthy month for the Midtown market,” said Frank Wallach, Colliers (CIGI)’ executive managing director of research and business development. “Midtown captured four of the top five largest leases in Manhattan.”

Midtown’s major deals included Fox Corporation and News Corp.’s renewal of a combined 1.1 million square feet at 1211 Avenue of the Americas, Citadel’s master leases for Vornado Realty Trust’s 585,000-square-foot 350 Park Avenue, and Rudin Management Company’s adjacent 390,000-square-foot building at 40 East 52nd Street.

Meanwhile, Midtown South saw 1.06 million square feet leased in its largest month of deals since September 2022. Businesses in Downtown Manhattan took 210,000 square feet, thanks to two big transactions: The King’s College’s renewal of 53,000 square feet at 52 Broadway and Revlon’s 69,000-square-foot sublease at 55 Water Street.

And Manhattan companies are committed to keeping those deals flowing. Roughly 82 percent of Manhattan office employers plan on maintaining or expanding their New York City footprints, despite broadly adopting hybrid work, according to a Partnership for New York City survey of 140 firms. 

Manhattan’s office market will need more deals to lower its still high availability rate of 16.9 percent and sluggish leasing in the fourth quarter of 2022, Wallach said.

“There would need to be a continued amount of healthy leasing activity for not just several months, but at least several quarters to successfully chip away at that increase in supply over the last three years to get the market back towards equilibrium,” Wallach said.

While January’s leasing demonstrated that office demand hasn’t disappeared, the market has a long way to go to fill the gap left by the pandemic, Wallach added. Office availability has increased by 70 percent since March 2020, Wallach said. And 29 percent of employers have reduced their office footprints since February 2020, according to the Partnership survey. 

Celia Young can be reached at cyoung@commercialobserver.com.