Lower Manhattan Office Market Struggles in 2024 While Rest of NYC Booms

Manhattan as a whole had a relatively good year for office leasing, but Lower Manhattan bucked the trend and struggled in 2024, according to a recent report from the Alliance For Downtown New York.

Lower Manhattan saw the lowest annual leasing volume “in recent memory” with just 2.24 million square feet leased the entire year, a 21 percent decrease from 2023, the report said.

The fourth quarter recorded 338,000 square feet of new leasing — a low number partly due to more and more obsolete space coming off the market.

Even with the low leasing numbers, downtown actually ended the year with the fourth consecutive quarter of positive absorption at 3 million square feet, largely thanks to “underperforming office properties leaving the market” for office-to-residential conversions, the report said.

Last year’s biggest leases downtown included electronic payment company Stripe’s 147,509-square-foot deal at 28 Liberty Street, ticketing resale platform StubHub’s sublease for 103,188 square feet at 4 World Trade Center, and charter school chain Success Academy’s expansion to 94,000 square feet 120 Wall Street.

“Lower Manhattan’s office market continues to face some real challenges,” Jessica Lappin, president of the Alliance for Downtown, said in a statement. “However, it is worth celebrating the gains made by our tourism and hospitality sectors, which remain a bright spot.”

Downtown Manhattan hotels experienced “record-high room rates” of $363.16 per night and occupancy rates of 88 percent during the fourth quarter as tourism levels shot up, while its retail market saw “many new and diverse dining experiences” open up, the Alliance for Downtown New York said.

The area’s 65 retail openings in 2024 included Conwell Coffee Hall at 6 Hanover Street and Cantonese restaurant Yao NYC at 213 Pearl Street, according to the report.

Despite Downtown’s success with hotels and retail in 2024, the area fared considerably worse than Midtown’s office market, which recorded 6.3 million square feet of new leasing during the fourth quarter of 2024, according to a report from Colliers (CIGI).

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