Manhattan Office Leasing Jumps and Availability Drops in October: Report

October seems to have been a good month for Manhattan’s office market.

Office leasing activity in the past month has been “well ahead” of the 10-year average monthly leasing rate of 2.67 million square feet, according to a report from Colliers (CIGI), which started tracking the data in 2007. 

In fact, 3.9 million square feet of office space was leased just in October, Frank Wallach, head of research at Colliers, told Commercial Observer. And nearly 60 percent of that activity was centered in Midtown.

“If Midtown demand continues in November and December at the same rate it’s been going for the first 10 months of the year, then Midtown could very well end 2024 with the strongest yearly volume since 2018,” Wallach said.

The market’s success has largely been driven by major leases during October, including Bloomberg’s renewal and expansion to 924,876 square feet at SL Green Realty’s 919 Third Avenue and Blue Owl Capital’s expansion to 238,673 square feet at RFR Holdings’ Seagram Building.

As for availability rates in Manhattan, they dropped from 17.3 percent at the end of September to about 16.8 percent at the end of October — the lowest rate since September 2022, according to Wallach.

Midtown’s availability rate remained steady at 15 percent during October, while Manhattan’s downtown neighborhoods saw a drop from 20 percent in September to 18.3 percent this month, driven by “blocks of space withdrawn” rather than high leasing activity, Wallach said.

A lot of that withdrawn space comes from planned office-to-residential conversions.

Since early 2021, close to 8 million square feet of available space has been removed from the market due to planned residential conversions — and more than half of that number has come from 2024 alone, Wallach said.

Examples include Bushberg’s plans to convert the 1.2 million-square-foot office property at 80 Pine Street into residential use, as well as Metro Loft Management and InterVest Capital Partners’ proposal to turn the 24-story office building at 111 Wall Street into 1,350 apartment units.

In addition, Manhattan’s total sublease supply fell to its lowest level in nearly three years to 18.7 million square feet, Colliers’ report found. That was largely thanks to sublandlords keeping quality sublet space as demand grew, Wallach said.

Leasing activity will likely continue to increase during the last quarter of this year as landlords and tenants push to close deals before the holidays, Wallach said.

Isabelle Durso can be reached at idurso@commercialobserver.com.