Decline in Leasing Activity Doesn’t Equal Negative Absorption
Typically, when there’s a drop in leasing activity the result is negative absorption while availability increases. But that is not an absolute rule, Frank Wallach, senior managing director of research at Colliers International, tells GlobeSt.com.
NEW YORK CITY- Typically, when there’s a drop in leasing activity the result is negative absorption while availability increases. But that is not an absolute rule, Frank Wallach, senior managing director of research at Colliers International, tells GlobeSt.com.
In February, no large blocks of space, totaling more than 100,000 square feet, were added to the available office inventory. Also for the month, there were only 2.1 million square feet of total leasing volume, the lowest monthly volume since August 2019 due to impact of companies relocating to Hudson Yards and other popular submarkets. Simultaneously, a 197,000 square foot block of space was withdrawn from the market at 1440 Broadway, according to data from Colliers International.
These two events countered the impact a drop in leasing activity would typically have and, in fact, led to Manhattan having a 0.1 percentage point drop in availability to 9.9 percent, while absorption was positive 0.44 million square feet. The generally agreed-upon market equilibrium point is 10 percent. So Manhattan overall ended February with supply just below that 10 percent equilibrium point.
“At times, even with a drop in leasing activity, availability can still tighten and absorption can be positive,” Wallach said. “But the Manhattan market is not homogenous. Describing the state of the market depends on whether you are on Park Avenue, West 14th Street or Wall Street.”