Manhattan Office Availability Ticks Down After Active April

Demand for office space in Manhattan is on the rise again.

Owners inked deals with tenants for nearly 2.8M SF of offices in April, according to Colliers. That's about 1M SF more than was taken in March and nearly double last April's volume. 

The burst in lease signings, unlike some other recently active periods, was enough to surpass the amount of space being vacated by tenants. Office availability dropped for the first time in months, by 0.1% to 18%.

“Manhattan office leasing demand certainly outpaced supply in April,” Franklin Wallach, executive managing director of research and business development for Colliers in New York, said in a statement. “Although one month alone doesn’t dictate the direction of the market, April was a reminder that Manhattan’s office tenant base is diverse and that any recovery will be dependent on the combined actions of numerous industries.”

Demand for office space in Manhattan even outstripped Colliers’ five-year rolling monthly average of 2.3M SF. But the office market hasn’t returned to its former strength: April’s totals were still below the pre-pandemic monthly average, which was 3.6M SF in 2019, according to the report.

While the availability rate is still higher than a year ago, when 17.4% of Manhattan offices were looking for a tenant, an influx of new office space has come online in the months since. The 0.1% dip in availability from March to April this year shows the office market is stabilizing, according to Colliers’ analysis.

Roughly 9.1M SF of leases have been signed in 2024, ahead of last year's pace.

“The month of April highlighted that pockets of the market have shown signs of tempering the supply increase since 2020,” Wallach said.

All three of the city’s major office hubs saw increased leasing velocity. The largest deals were American Eagle Outfitters’ 338K SF consolidation at 63 Madison Ave., Palantir’s 140K SF renewal at 620 Sixth Ave. and TD Bank Group’s 80K SF lease at 22 Vanderbilt Ave.

Midtown South saw a 78.7% increase in leases from March to April, with 1.4M SF worth of deals. Availability in the neighborhood shrank by 0.3% to 18.4%.

In Midtown, demand for space grew by 20% from the month prior, with landlords signing 1.1M SF of deals. Availability shrank to its lowest point since October 2023 at 16.1%.

Downtown Manhattan remained the black sheep, with just 200K SF of leases signed last month. The numbers still represented an increase from March, when tenants took just 54K SF.

Asking rents across the borough hit $74.11 per SF, down from $74.51 in March and $75.13 in April 2023. Brokers have attributed the dip in asking rents to the higher-quality space being taken up over the past year, resulting in fewer high-price spaces being factored into the average.

Overall, Midtown rents were 8.5% lower than they had been in March 2020, and Downtown fell by 13%. Midtown South’s asking rents, by contrast, have grown by 3.2% over the same period, according to Colliers.