Manhattan's Office Market Starts 2023 With Best Month Since 2019
January was the strongest month for Manhattan office leasing that landlords have seen since December 2019, according to a new report from Colliers.
Approximately 4.4M SF of office space was leased last month, more than double the 1.8M SF signed in December and roughly double the 2.2M SF signed in January 2022.
Office leasing volume was more than double the average month in 2022, and above the average monthly volume from 2019 through 2021, the report found. Despite the boom in activity, Manhattan's availability rate was unchanged, according to Colliers.
More than half of the total signed this January came from just five leases, four of which were renewals, extensions or expansions.
The largest lease of the month was Fox Corp.’s 666K SF lease extension at Ivanhoé Cambridge’s 1211 Sixth Ave., signed as a package deal with NewsCorp.’s 486K SF renewal in the same building. Citadel Enterprise Americas’ two leases — at Vornado’s 350 Park Ave. and Rudin’s 40 East 52nd St. — were also both among the five largest lease signings in January, coming in at 585K SF and 393K SF, respectively.
The fifth-largest lease last month was alternative investment firm Two Sigma Investments, which signed a seven-year renewal for 265K SF at Hudson Square Properties’ 100 Sixth Ave.
The leases continue recent market trends, with strong activity led by large deals signed in Class-A properties in Midtown and Midtown South and older buildings struggling to attract new tenants and retain existing ones. Pullbacks in the fourth quarter by large tech tenants feeling the pinch of economic contractions also led to a slow end of year for office landlords.
Total availability has grown by 69.4% since March 2020, reaching 91.25M SF, and has only contracted by 1.4% over the past 12 months, the report said.
Average asking rents fell in Midtown and Downtown year-over-year by $1.25 per SF and $0.45, respectively, while rents in Midtown South rose by $2.52 per SF.
Midtown led the borough in terms of leasing volume with 3.16M SF of leases signed in January this year — almost triple the 1.1M SF signed the previous January. The first month of this year was also Midtown’s strongest leasing month since July 2018, per Colliers.
Midtown South also saw a significant increase in space leased, with just over 1M SF signed this January compared to 669K SF the previous year.
Downtown, meanwhile, saw a significant decrease in leasing volumes: 212K SF signed this January compared to 510K SF a year earlier. In the intervening 12 months, a handful of Lower Manhattan office buildings have been targeted for conversion to residential.
