Sluggish April Office Leasing in Manhattan Falls Behind Pandemic Averages
By Rebecca Baird-Remba May 2, 2023 4:01 pm
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The Manhattan office leasing market continues to struggle with leasing numbers for the month of April, lagging even the low-tide monthly figures during the pandemic years, according to a new report from Colliers (CIGI).
Tenants leased 1.5 million square feet of office in Manhattan last month, an 8 percent decline from March and a 44 percent drop compared to the same time a year ago. April’s leasing volume was well below the monthly average for the past three years, compared to 2022’s average monthly volume of 2.4 million square feet, 2021’s 2.1 million square feet, and even 2020’s pandemic-rattled 1.6 million square feet.
Only two office leases larger than 100,000 square feet were closed in April, and just one lease between 50,000 and 100,000 square feet was signed, Colliers found. Still, average asking rents across Manhattan rose by about a dollar per square foot compared to March, hitting $75 a square foot.
Office availability also increased slightly — 0.3 percentage points — from March to April and reached 17.4 percent, according to Colliers. That matches the record-high availability of February 2022.
Absorption during April was negative 1.35 million square feet, meaning that more space was vacated than leased. Overall, available office space has grown 75 percent since March 2020, to a record high 94 million square feet.
Midtown leasing was up by about a quarter month-over-month, but still down by about a third from April 2022, according to Colliers. Midtown also notched the only deals larger than 100,000 square feet, with HPS’s 160,000-square-foot renewal and expansion at 40 West 57th Street and Sheppard Mullin’s 108,000-square-foot renewal and expansion at 30 Rockefeller Plaza.
Meanwhile, Midtown South saw its lowest monthly leasing volume since March 2021, declining 62 percent year-over-year, Colliers found. The largest transaction in the submarket was Claims Conference’s 34,000-square-foot renewal at 1359 Broadway.
Despite lackluster leasing activity, asking rents rose slightly month-over-month in both Midtown and Midtown South.
Downtown had a predictably slow month, with leasing volume declining 60 percent compared to March and 15 percent year-over-year, according to the report. Its average asking rent also declined slightly from the previous month to $59 a square foot. Lower Manhattan continues to have the highest availability of the three main submarkets Colliers tracks, at 20 percent.
And things could get worse before they get better, as the supply of Manhattan office continues to expand over the next several months.
“If demand does not increase, you could see a higher increase in availability,” said Frank Wallach, an executive managing director at Colliers. “You still have millions of square feet of new construction and renovation, and huge blocks of vacancy that are set to enter the market in the coming quarters.”
Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.
