Empty Midtown Office Space Grows as Tenants Relocate
Midtown leasing activity saw a steady decrease in volume in 2019 at an estimated 25 percent from the previous year and is on track to see the highest quarterly supply of office inventory in nearly five years with a chance it may not remain stable.
NEW YORK CITY – Midtown leasing activity saw a steady decrease in volume in 2019 at an estimated 25 percent from the previous year and is on track to see the highest quarterly supply of office inventory in nearly five years with a chance it may not remain stable, Frank Wallach, senior managing director of research at Colliers International, tells GlobeSt.com.
For the year 2019, Midtown leasing volume totaled 15.8 million square feet, marking a six-year low and ended the year with an availability rate of 11.1 percent, the highest quarterly supply of office inventory in close to five years. In addition, leasing activity in Midtown was lower during the first two months of 2020 at 2.5 million square feet compared to 3.2 million square feet.
One of the reasons for Midtown’s increased availability rate is because of the massive blocks of space at an estimate of 500,000 square feet each that entered the market at 330 West 42nd St. and 825 Third Ave. in October 2019. Due to the square footage coming online at that time, Midtown’s availability rate jumped by 0.7 percentage points to11.3 percent at the time while absorption was negative, according to Wallach.
Looking towards the future, Midtown leasing activity needs to dramatically increase during 2020 in order for supply to tighten or at the very least remain stable, according to Wallach. “Millions of square feet of large 100,000-square-foot plus blocks of space are scheduled to return to the availability rate in Midtown in the next 12-24 months due to committed tenant relocations,” he said. “If Midtown leasing volume does not increase, availability could possibly increase further.”