Manhattan Office Availability Dips After Strong October

Manhattan leasing picked up last month, driving some positive trends for the country’s largest office market.

Some 2.6M SF of leases were signed during October, marking a 63% jump on the same period last year and well over a 50% increase on September, according to Colliers data.

Colliers Executive Managing Director Franklin Wallach said that the increase was tied to a handful of large deals rather than a broader shift in the market. He said nearly half of the leasing volume stemmed from just four large deals. Leasing through the first 10 months of the year is still 16.1% behind where the city was in 2022.

“Although noteworthy, it’s not unusual for a few large leases to move the demand needle during any specific period,” Wallach wrote in an email. 

The biggest deal of the month was the city government’s lease extension for 538K SF at 150 William St. Second was Ralph Lauren’s 256K SF renewal at RXR Realty's Starrett-Lehigh Building. Other major deals included Weill Cornell Medicine’s 300K SF renewal and expansion at 575 Lexington Ave. and LinkedIn’s 144K SF relocation and expansion at the Empire State Building.

Midtown leasing activity increased by 23% over September, while Midtown South activity rose by 22.6%. October volume Downtown reached 71.8% above its five-year rolling monthly average, largely as a result of the city's lease.

Overall, the big leasing deals pushed down the city's availability rate slightly to 17.8% from 17.9%, although it is still above the 16.8% rate from October 2022. Another 150K SF of sublease space was removed from the market, the fifth consecutive month of sublease availability declines.

The average asking rate citywide, $75.40, was nearly $1 higher than a year ago, but still 5% below the pre-pandemic rate.

There were recent additions added to sublease supply, like 1120 Sixth Ave. and 30 Hudson Yards, Wallach said. He also pointed to former WeWork spaces that are directly available to rent, including 83 Maiden Lane and 2 Herald Square.

“We also continue to see the impact of the flex/coworking industry on the market,” he wrote. “On the other hand, the evolving trend of residential conversions continues to remove excess blocks of space from the market.”

Wallach pointed to the Flatiron Building as an example of office space being taken off the market. The owners announced plans last month to convert the historic office tower to residential.