Office Manhattan November Leasing Activity Down 55% From October

Office leasing activity in Manhattan continued its downward trend in November. Research from Colliers International found that leasing activity declined 55% from October and 80% year-over-year.

In November, a total of .79 million square feet in lease transactions closed in Manhattan, compared to 3.58 million square feet in November 2019, with negative absorption of nearly 3 million square feet. As a result, the market’s vacancy rate increased yet again for the sixth straight month to 13.5%, the highest vacancy rate in the market since 2003. The sublease market is driving a significant portion of the office vacancy, accounting for nearly 25% of total available space. The sublease supply increased again in November by .99 million square feet.

Midtown continued to be the bright light in the Manhattan office market. Like in October, Midtown drove the majority of leasing activity, with total transaction volume up 29.3% for the month; however, activity was still down more than 65% year-over-year. Travelers inked the largest lease in the market, signing a 134,000-square-foot lease renewal at 485 Lexington Avenue. The activity wasn’t enough to keep the vacancy rate from creeping up—it increased by .5% for the month, the highest on record—or rental rates from falling—they were down 1.1% to $82.87 per square foot for the month.

Leasing activity in Midtown South and Downtown decreased during the month of November. In Midtown South, activity fell a jarring 71.8% compared to October with only one lease above 100,000 square feet closing, Apple’s expansion at Penn 11. Year-over-year, leasing activity fell 84.7%, pushing the vacancy up to a record high of 12.8%. Asking rents declined .6% to $71.81 per square foot, another record low for the market.

In Downtown, leasing activity barely made a blip on the radar with only .03 million square feet closing during November, according to the report from Colliers. In October 2020, .22 million square feet of lease transactions closed and in November, the market had .36 million square feet in lease deals. None of the lease deals signed were more than 20,000 square feet. The vacancy rate grew to 12.7%, the highest rate in two years, and rents fell .3% to $63.43 per square foot.

Despite the negative leasing activity, Manhattan has started to recover office-using jobs. A recent report from Newmark found that New York City has recovered 30% of its office-using jobs lost since the start of the recession, painting a bright outlook for office recovery in the market. Job gains in the professional and business services industries and the financial activities sector were responsible for the majority of job growth, but New York also regained information jobs as well.