The picture for Manhattan office leasing continues to be murky. The ongoing presence of the Coronavirus pandemic is putting a damper on activity, but some leasing is still taking place.
On the bad news front, availability across the borough last month soared to 12.9%—it's highest level since 2004, according to a new report from Colliers International. Average asking rents for the month fell in each of the three submarkets, but only by about one dollar in each area, leading Manhattan's total figure to come in at $76.20, a slight dip from $77.12 in September but a steeper decline from $79.61 year-over-year.
Yet, leasing in October was healthy, growing by 57.4% over the prior month. The lion's share of the transactions took place in Midtown South, where NYU Langone renewed its 633,000-square-foot agreement at One Park Ave., inking the second largest lease of 2020. Centric Brands, Li & Fung and Noom also signed leases in the submarket.
Also in the good news column, monthly leasing in the Downtown corridor jumped by 59.3% month-to-month. The largest lease signed was Topps Company's 71,000-square-foot renewal at One Whitehall St.
However, leasing activity in Midtown nosedived last month by 63.4% over September's report, and fell year-over-year from 1.74 million square feet to just 0.32 million square feet. The submarket's availability also spiked to 13.9%, it's highest level in 11 years, and negative absorption was seen for the eight consecutive month.
The other submarkets hit rocky roads too. The availability rate in Midtown South reached a record-high of 12.1% after a combined 271,000 square feet of sublet space was listed at two properties: 333 W. 34th St. and 114 Fifth Ave. Absorption for the month was, not surprisingly, negative 1.74 million square feet.
A similar scenario played out in Lower Manhattan in October. Average asking rent fell for the sixth straight month, to $63.62 per square foot, and below average priced sublet space was put on the market while lower repricing took place at 107 Greenwich St. and 195 Broadway. Also, leasing was down substantially year-over-year, falling from 0.68 million square feet in October 2019 to 0.22 million square feet last month.
The report is a bit rosier than Colliers' third quarter office report, where distress was the only outlook on the horizon. In that report, year-over-year activity declined by half, while the bottom fell out of velocity, which dipped 46% below Manhattan's five year rolling average. In that research, Colliers said, "If leasing volume continues at the current pace for the remainder of the year, full-year leasing volume in 2020 [which was 19.74 million square feet] would be the lowest so far this century."
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
