Manhattan Office Leasing Rose 18.6% in January

Manhattan leasing activity increased by 18.6% to reach 1.90 million square feet in January, hitting its highest mark since July 2020.

The good news ends there, though. Leasing volume was down 47% compared to January 2020 and well below the pre-pandemic average monthly volume in 2019 (3.58 million square feet), according to Colliers International.

For the eighth consecutive month, the availability rate increased in Manhattan, according to Colliers. It rose 0.6 percentage points to a record-high 14.9%. Net sublet availability saw its smallest monthly increase in sublet supply since June 2020, only rising by 0.45 million square feet. Monthly absorption in Manhattan was negative at 2.85 million square feet.

For the seventh consecutive month, the average asking rent decreased in Manhattan. It dropped by 1.0% since December to $73.65 per square foot, which was its lowest average since April 2018. The average asking rent decreased by 7.3% since March 2020, according to Colliers.

The Midtown market had Manhattan’s four largest leases in January. That propelled its leasing volume by more than three-fourths since December to 1.35 million square feet. Still, leasing fell 22.9% year-over-year. The availability rate increased by 0.5 percentage points to 15.7%, which was the highest on record. Absorption was negative at 1.04 million square feet, according to Colliers. More than 100,000 square feet of inventory was added in four locations. Asking rents decreased 0.8% to $81.63 per square foot.

Midtown South’s leasing volume jumped 18.8% from December 2020 to 0.41 million square feet. Still, leasing activity decreased 55.1% from January 2020 to January 2021. For the eighth consecutive month, the availability rate increased, rising 0.3 percentage points to a record high of 13.7%. January’s absorption was negative 0.51 MSF while asking rents decreased 0.9% to $69.30 per square foot.

In Downtown, leasing volume of 0.14 million square feet represented a decrease of nearly three-fourths since December 2020. Downtown’s availability rate increased by 1.2 percentage points to 15.1%, which was the highest since 2013. Absorption was negative at 1.31 million square feet. As large blocks of space were added at three locations, asking rents decreased 0.8% to $61.90 per square foot. That was the lowest mark since December 2016.

While the Colliers report paints the picture of a market still struggling, broker sentiment is beginning to improve in New York, according to The Real Estate Board of New York, which reported that its Commercial Broker Confidence Index increased 34% from Q3 to 2.89. In Q4 2016, commercial confidence was at 5.85.