Leases  ·  Analysis

NYC Sees Spike in Energy Firms Leasing in 2023: Report

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Energy firms had a spike in office leases throughout Manhattan last year, as New York State’s drive to transition its grid to renewable energy sources attracted new companies to the city, according to a new report from CBRE.

Firms focused on energy investment signed 165,000 square feet of office leases in 2023, in a 289 percent spike from the 42,456 square feet signed by those companies in 2022, the CBRE report found.

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Although the square footage leased is modest compared to office-heavy sectors like law or finance, 27 firms focused on energy investment have inked 400,000 square feet of office deals since 2018, according to CBRE. And 12 of them hold all-renewable energy portfolios. 

Part of the reason for the increasing leasing for energy firms has been the push from the city and state governments to green New York’s energy grid.

In 2019, the state passed the Climate Leadership and Protection Act while the city passed Local Law 97. Both pieces of legislation were focused on greening the grid by 2050 and reducing carbon emissions from buildings, which has sparked more corporate investment from firms focused on wind, solar and hydropower. 

Since 2019, 114,705 square feet of office space has been leased by 15 companies involved in investing in or developing solar panel installations, the report noted. Another seven companies focused on developing offshore wind farms have leased 127,136 square feet during the same period. 

The brokerage found that a record 13 energy-related firms — including nine companies focused on renewable sources — inked office deals in 2022. Last year saw 10 energy firms take space in Manhattan, with eight of them coming out of the renewable energy industry. 

Aside from the legislation, New York State is funding several offshore wind projects, the first of which is scheduled to come online in 2026, along with solar panel farms in several upstate towns and a 350-mile transmission line to bring hydroelectric power from Quebec. 

Startups interested in wind power, electric vehicle charging and solar panels have also been flocking to Sunset Park and the Brooklyn Army Terminal in Brooklyn, as Commercial Observer reported earlier this week, thanks to a mix of city programs and funding from offshore wind developer Equinor

Rebecca Baird-Remba can be reached at rbairdremb@commercialobserver.com.