Sunday Summary: Just When We Were Feeling Bullish …

Maybe it was the fact that this is the winter that just doesn’t end, maybe it was the shadow of tariffs on one end of the political spectrum, or real estate tax hikes on the other, but, after feeling like the Manhattan office market was firing on all cylinders in January, February saw a significant step backward.

There was about 2.23 million square feet worth of leases in February, according to Colliers — that’s a 39.5 percent drop from the previous month!

And, if you think this is some sort of quirk of the calendar where February is always slow or something, just note it was also a 29.7 percent drop from February 2025. Demand was 19 percent below the 10-year monthly average, and availability grew for the first time in two years. (Sure, it grew only 0.1 percent, but in a market where so little office inventory has come online, this should be at least a little worrying.)

“There were still silver linings in February that illustrated Manhattan’s continued recovery as the availability rate remained stable in Midtown South and Downtown,” said Colliers’ Franklin Wallach, the executive managing director of research and business development for the firm. “All three Manhattan markets recorded higher asking rents — with Manhattan’s average at the highest since August 2020 — and the overall available supply was reduced by more than 25 percent since February 2024.”

So there’s that.

From our perspective, it’s not like there was no leasing activity. For the first week in March we saw Latham & Watkins expand its footprint at RXR’s 1285 Avenue of the Americas to 251,354 square feet by adding an additional 131,354 square feet; Uber was also feeling expansive, with plans to add 86,071 square feet to its offices at 3 World Trade Center, bringing its total up to 437,571 square feet; and the data platform Snowflake took 82,505 square feet at BXP’s 7 Times Square.

And Coinbase, the cryptocurrency exchange, sees the value in office. The platform announced plans to invest $30 million to revamp its office space at SL Green Realty’s One Madison Avenue, largely in preparation for welcoming more than 600 new employees.

Keep it up, tenants, and March will be far better than February.

Jobs report

Yet another reason February stunk: The U.S. economy shed a whole bunch of jobs: 92,000 of them, according to the Bureau of Labor Statistics.

Nobody would say that’s a great sign for the economy as a whole, or for CRE in particular. However, this news should come with a significant caveat: Construction jobs might have risen in February, according to a previous report from ADP. (The two reports appear to be at odds.)

ADP said there were a solid 19,000 new hires in February in construction — BLS says the bulk of the jobs lost last month were in health care, information services, and warehouse and transportation.

On an individual jobs level, there were some interesting people moves last week.

Mark Washington was hired away from CBRE as Walker & Dunlop’s new managing director of capital markets and multifamily investment sales in the Pacific Northwest.

Peter Sibilia, who had been a managing director at Rithm Capital, has pulled up stakes to be the head of U.S. transactions at LaSalle Investment Management, which is the investment arm of JLL.

One of everyone’s favorite coworking platforms, Industrious, just promoted Gentry Long to president.

And Harrison Sitomer got the nod for the presidency at SL Green Realty, making him second in command under Marc Holliday.

Oh, yeah, we’re also worried about multifamily

Not all multifamily. But we were a little struck by the fact that a number of the panelists at Commercial Observer’s Multifamily Investment Forum on Feb. 26 were … kinda glum.

“I don’t think I’ve been on such a grim panel,” said Hudson Properties’ David Kramer from the stage. “Usually it’s like infomercials.” (Hey, you get the hard truth from CO, David!)

Again, there’s a lot to get excited about in various pockets of the multifamily market, but many of the panelists faced the cold reality that without significant tax relief, or the cost of labor, land or materials coming down, the most ambitious plans for housing will probably never pencil out in New York City.

MaryAnne Gilmartin, the morning’s keynote speaker, noted that building permits had declined 71 percent since the city’s answer to tax relief — 485x — went into effect.

“The 485x program is existential to what we are doing,” said Gilmartin. “Yet that program will not bring a lot of housing. You can’t regulate your way to abundance.”

One sees it in some of the people who have shifted out of multifamily — or to different parts of multifamily. Andrew Levison of the Dermot Company owned a lot of New York affordable housing but moved out of it after rent laws went into effect in 2011, 2015 and 2019. “We really moved away from that business because we saw that it was getting really hard,” Levinson told CO in an interview published last week.

Big picture

Of course, one bad month shouldn’t darken the bigger picture. Despite some worrying signs, there were plenty of positive ones, too.

Dwight Capital, for one, is seeing the potential in senior housing and health care sectors, having acquired Midland States Bank’s senior housing U.S. Department of Housing and Urban Development (HUD) mortgage servicing rights portfolio for a cool $500 million.

Amazon Data Services dropped $427 million to purchase George Washington University’s 122-acre Virginia Science and Technology Campus in Ashburn. (And with good reason — industrial leasing is still going strong. Witness Varda Space Industries’ 205,443-square-foot industrial and office lease at 2031 East Mariposa Avenue in El Segundo.)

And the money is out there, be it from family offices or private equity funds. Did you know that Benefit Street Partners just raised … wait for it … $10 billion in investable capital?

Catch up with BSP’s Michael Comparato and Allison Davi in this week’s Sit-Down and take comfort in the fact that this month will be better.

See you next week!