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Manhattan Office Leasing Rises

by Steven Muller - Nov 05, 2021 2:41pm

October was a banner month for Manhattan’s office market, where 2.7 million square feet of space was leased—the highest amount recorded since January 2020 and 10.8% higher than in September, according to Colliers data. With two months left in the year, the 19.03 million square feet of space leased this year has already exceeded the full total for 2020, when 18.97 million square feet was taken. The volume of available space on the market exceeded the space that was leased by about 900,000 square feet, however, thanks to the addition of 1.46 million square feet under construction at Brookfield Properties’ 2 Manhattan West. About 25 million more square feet of office space is expected to hit the market by 2024, making it the largest block of space to come online in a three-year period since the 1980s. “Two Manhattan West entering the availability rate this month and causing a significant bump in overall supply is just evidence that as much as demand has been increasing, there is still the challenge of all of this space coming on the market and needing demand to surpass that supply,” Colliers research director Frank Wallach said. The Manhattan availability rate overall rose to 17% last month from 16.8% in September and 12.9% in October 2020. Midtown was the only office market where availability decreased, falling from 17.1% in September to 16.9% last month. “There is continued pressure on demand to not only remain healthy but [to] continuously increase in order to counter this increasing supply of space entering the market,” Wallach said. If leasing continues at the current pace, Manhattan will hit about 23 million square feet for the year, he added, but that is still about half of the 43 million square feet leased in 2019. Despite the robust demand for space, asking rents in October reached $73.66, down from $76.20 a year ago, the data shows. In Midtown South, however, prices are higher than pre-pandemic levels—$76.71 last month compared with $72.26 in October 2020—because of the expensive prices at 2 Manhattan West. The largest deals driving activity last month were NBCUniversal’s 340,000-square-foot lease extension at 1221 Sixth Ave., law firm Venable’s new 157,808-square-foot lease at 151 W. 42nd St. and Verizon’s new 142,938 square-foot marketing office at 155 Delancey St.

October was a banner month for Manhattan’s office market, where 2.7 million square feet of space was leased—the highest amount recorded since January 2020 and 10.8% higher than in September, according to Colliers data. 

With two months left in the year, the 19.03 million square feet of space leased this year has already exceeded the full total for 2020, when 18.97 million square feet was taken.

The volume of available space on the market exceeded the space that was leased by about 900,000 square feet, however, thanks to the addition of 1.46 million square feet under construction at Brookfield Properties’ 2 Manhattan West.

About 25 million more square feet of office space is expected to hit the market by 2024, making it the largest block of space to come online in a three-year period since the 1980s. 

“Two Manhattan West entering the availability rate this month and causing a significant bump in overall supply is just evidence that as much as demand has been increasing, there is still the challenge of all of this space coming on the market and needing demand to surpass that supply,” Colliers research director Frank Wallach said. 

The Manhattan availability rate overall rose to 17% last month from 16.8% in September and 12.9% in October 2020. Midtown was the only office market where availability decreased, falling from 17.1% in September to 16.9% last month. 

“There is continued pressure on demand to not only remain healthy but [to] continuously increase in order to counter this increasing supply of space entering the market,” Wallach said.

If leasing continues at the current pace, Manhattan will hit about 23 million square feet for the year, he added, but that is still about half of the 43 million square feet leased in 2019.

Despite the robust demand for space, asking rents in October reached $73.66, down from $76.20 a year ago, the data shows. In Midtown South, however, prices are higher than pre-pandemic levels—$76.71 last month compared with $72.26 in October 2020—because of the expensive prices at 2 Manhattan West. 

The largest deals driving activity last month were NBCUniversal’s 340,000-square-foot lease extension at 1221 Sixth Ave., law firm Venable’s new 157,808-square-foot lease at 151 W. 42nd St. and Verizon’s new 142,938 square-foot marketing office at 155 Delancey St.

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