Available Manhattan Office Space Hits 3-Year Low, Driven By Big Finance Leases
New York City’s office market seems to be slowly recovering — although the supply of the best-in-class offices tenants most covet is thinning out.
NYC's office market had its most active quarter since 2021, with activity up nearly 50% year-over-year, according to Savills. Tenants signed 9.3M SF of leases in Q3, with financial services firms responsible for 40% of all leasing activity.
The number of large leases is increasing, data from Avison Young shows. There have been 25 transactions spanning more than 100K SF this year, up from 18 at this point last year. Two leases larger than 100K SF have closed in the first two days of the fourth quarter, Avison Young Market Intelligence U.S. Office Lead Danny Mangru said in an interview.
“There's a lot of strength in the Manhattan market that's happening right now, and we're most likely going to see that continue into Q4,” Mangru said. “Large-block transactions are really driving the market right now.”
Manhattan’s leasing activity continued its upward trajectory from the first half of the year, with overall availability dropping below 19% for the first time since Q1 2021.
“There is cause for optimism as we head into 2025,” Rory Murphy, Avison Young market leader for New York City, said in a statement. “While transactions continue to take longer to close than pre-pandemic comparisons, there are signals that we could see market activity compress those timelines on the other side of the election.”
Blackstone’s renewal and expansion of its headquarters to more than 1M SF at 345 Park Ave. in Midtown East was the quarter’s largest deal. It was also a prime example of a trend of financial firms snapping up huge spaces on Park Avenue, as Bisnow previously reported.
Ares Management signed for 307K SF at 245 Park Ave., and Elliott Management Corp. took 149K SF at 280 Park Ave. in the quarter. Just one of the 10 largest leases was a new lease rather than a renewal or expansion, Yeshiva University’s 150K SF at 1 Herald Square in Midtown South.
Demand is staying strongest for trophy and Class-A properties. Together, trophy and Class-A properties make up just a quarter of inventory but have accounted for more than 75% of leasing activity in 2024.
Overall asking rents dropped by roughly 0.3% during the quarter and were down 1.6% year-over-year, Colliers also found. Average prices were lower across more than half of the Manhattan submarkets tracked by the brokerage, with the average asking rent still more than $5 below the $79.47 commanded in March 2020.
The latest downtick in asking rents is a result of shrinking available supply at the top of the market and growing vacancy in Class-B and C buildings, Savills researchers wrote in the report.
Savills, which also published asking rent breakdowns across submarkets in its quarterly report, found that the Financial District had the highest availability rate at 28.6% and the second-lowest asking rents. The City Hall submarket commanded the lowest rents at $47.74 per SF.
Availability was tightest in the Union Square submarket, which had an availability rate of just 12.9% and asking rents around $81.07 per SF. The city’s priciest submarket was Hudson Yards at $132.47 per SF with a 16.3% availability rate.
CORRECTION, OCT. 2, 4 P.M. ET: A previous version of this story misstated the number of transactions over 100K SF in 2023. This story has been updated.
