Manhattan Office Leasing on Track for Busy Third Quarter
By Isabelle Durso September 3, 2024 2:48 pm
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The Manhattan office leasing market has been very busy this summer, and it looks like that’s going to make for a good third quarter.
The third quarter of 2024 is set to be the “most active quarter so far this year” after more than 1.3 million square feet were leased in August, according to a monthly report from JLL (JLL). That brings total leasing activity so far in 2024 to 17.6 million square feet — a 27 percent increase from the same time last year.
Even though a Colliers report found that leasing in the normally slow month of August stumbled a bit, falling by nearly a third from July, the leasing numbers were still 3.5 percent higher compared to last August, The Real Deal reported.
“We anticipate this increased leasing volume to remain elevated through the fourth quarter as availability of new and trophy space continues to narrow,” JLL Vice Chairman Evan Margolin said in a statement to Commercial Observer. “Competition for space and approaching lease expirations are often the drivers for execution of transactions that have been delayed by indecision.”
Brokers were forced to stay away from the beach and stay close to the closing table this summer as leasing activity of 5.3 million square feet filled the first two months of the third quarter, JLL reported. That represents 82 percent of the second quarter’s total leasing activity, and there’s still another month to go before this quarter ends.
Plus, a total of 500,000 square feet has been removed from the office market as more developers join the office-to-residential conversion trend, leaving the overall office availability rate at just 17.6 percent, according to JLL.
It’s not just offices being converted that led to a busy summer, but it’s also thanks to major leases such as New York University master-leasing 500,000 square feet at Vornado Realty Trust’s 770 Broadway, where Facebook exited earlier this year.
Facebook’s parent company Meta was set to downsize its office at the building by 275,000 square feet after cutting its footprint at several other properties around New York, including its Hudson Yards offices and its location at 225 Park Avenue South.
Even with the sunny summer of leasing, there’s still 87.4 million square feet of available office space in New York. Almost half that space has been on the market for over two years, suggesting “the relevant market of office product is much smaller and targeted within in-demand areas and buildings,” JLL said in its report.
Still, the third quarter will wrap up at the end of September in what will likely be a busy end to a busy quarter, JLL said.
Isabelle Durso can be reached at idurso@commercialobserver.com.
