Busy Summer Continues For NYC Office Leasing With Midtown The Clear Leader
Office leasing in New York City jumped in July, driven by a rush of activity in Midtown Manhattan.
Manhattan signed 3.9M SF of leases during the month, according to new data from Colliers. The total is 57.9% higher than in June and 66% more than a year earlier.
July’s leasing activity bodes well for the health of the country’s largest office market, Franklin Wallach, executive managing director of research and business development for Colliers in New York, said in a statement.
“The Manhattan office market gained significant ground in its march towards recovery,” he said. “Similar to what took place during the second quarter, occupier demand grew and outpaced supply while additional blocks of space were simply withdrawn from the market.”
The month of leasing was higher than the five-year rolling monthly leasing average of 2.3M SF, as well as the prepandemic average of 3.6M SF.
Availability dropped to 17.6% during the month. The reduction of 0.3 percentage points from a month prior is the steepest decline since September 2022, according to Colliers.
Sublease supply also dropped, this time to the smallest market seen since April 2022 at 19.8M SF. Although the market appears to be improving overall, Manhattan still has 41M SF of excess office space, Wallach said.
“The Manhattan market still has a long road ahead before resembling its pre-2020 status,” Wallach said.
That road to recovery appeared to splinter between submarkets in July, Colliers data shows.
The lion’s share of July’s leases were concentrated in Midtown, where landlords signed 3M SF of deals and the five largest leases of the month.
The biggest was Blackstone’s expansion and extension at Rudin’s 345 Park Ave., which spanned nearly 1.1M SF and accounted for a quarter of the month’s total leasing volume.
The next two largest were renewals and expansions, with law firm Willkie Farr & Gallagher’s 315K SF at CommonWealth Partners’ 787 Seventh Ave. and Ares Management Corp.’s 307K SF at SL Green’s 245 Park Ave.
Other top leases in the month were CBRE’s extension at 200 Park Ave. and Elliott Investment Management’s 149K SF lease at 280 Park. The deals reinforced the notion that finance firms have been increasingly aggressive in securing Park Avenue office space.
Midtown South accounted for 680K SF of leasing activity, pacing 18% below the month prior but 50% higher than a year earlier. Availability in the submarket dropped by 0.2 percentage points, and asking rents averaged $80.18 per SF, a little under $2 below last year's level.
But Lower Manhattan hasn't benefited from the momentum. Owners signed just 180K SF worth of deals in the month, down 40% month-over-month and 80% year-over-year. Asking rents in the submarket were $57.10 per SF, 2.1% below where they were a year ago.
As downtown buildings continue to be sold for conversion into apartments, availability still narrowed, down more than 1% from last year — although the 21.6M SF of available space in the submarket is roughly twice what it was before the pandemic, according to Colliers.
