Things are starting to look up in Manhattan's office market. For the fourth consecutive month, leasing activity has improved in the market, according to a new report from Colliers. In August, leasing activity totaled 2.5 million square feet, an increase of 3.9% over July and the highest since January 2020, when leasing volume totaled 3.7 square feet.

There were two notable lease transactions in August that helped to boost leasing activity: Crédit Agricole's 167,000-square-foot relocation at 1301 Avenue of the Americas and BDO USA's 143,000-square-foot lease at 200 Park Avenue. The two deals were the largest deals of the month. Overall, the deal activity helped to drive the market vacancy rate down by .2% to 16.9%. Although the decrease seems nominal, it is the largest monthly decrease in vacancy since June 2019.

While the market is making strides toward a recovery, it has a long way to go to offset the losses during the peak of the pandemic. Since March 2020, when the pandemic began, the vacancy rate has increased by 68.5% or a total of 90.7 square feet. In terms of leasing volume, the gains in the last four months have delivered only a slightly better 2021. Year-to-date leasing activity is only 13.9 million square feet this year compared to 13.7 million square feet in 2020.