Manhattan Nabs Strongest Quarterly Office Leasing Numbers Since 2019

Manhattan posted its strongest quarterly office leasing volume since year-end 2019 in the third quarter with a 26% increase to end the quarter at 9.23 million square feet, according to Colliers.

Year-to-date leasing volume totaled 24.17 million square feet, a nearly 50% increase over the 16.34 million square feet leased during the same period in 2021 and Colliers expert say that if leasing volume were to continue at the same pace for the remainder of the year, 2022’s full-year leasing volume would surpass 2021’s full-year total (24.96 million square feet) by 29.1%. Net absorption clocked in at a positive 4.13 million square feet.

Midtown’s leasing volume jumped by more than one-third over the previous quarter, while demand also increased by 46.2% year over year. YTD 2022 leasing volume, at 11.57 million square feet, was 42.3% higher than YTD 2021 activity. The largest leases included Datadog’s 331,000 sq. ft. renewal and expansion at 620 Eighth Avenue, Indeed’s 247,000 sq. ft. renewal and expansion at 1120 Avenue of the Americas and Katz Media Group’s 227,000 sq. ft. renewal at 125 West 55th Street.

In Midtown South, 3.46 million square feet of space was leased to lead to the neighborhood’s strongest quarterly leasing volume since Q4 2019. Leasing volume grew by 1.2% since Q2 2022 and jumped by almost one-third, year-over-year. YTD 2022 leasing activity was 86.3% higher year-over-year. And Lower Manhattan’s leasing activity at 1.32 million square feet  more than doubled, quarter-over-quarter, owing largely to four separate 100,000+ sq. ft. leases in the quarter.

Overall, asking rents were lower than in previous quarters at $74.07 per square foot, but Colliers attributes the drop in pricing to above-average priced large blocks of space that were leased and removed from available inventory. This was especially true in new construction/major renovations and other Class A buildings, Colliers experts say.

“Demand greatly outpaced supply during the third quarter and flight-to-quality was a key driver,” said Franklin Wallach, Executive Managing Director of Research & Business Development | New York at Colliers. “Additionally, numerous pockets of the market made significant gains in chipping away at the excess supply. However, this was not observed in all Manhattan neighborhoods, and with nearly 35 million square feet of negative absorption since March 2020, the demand must remain strong in order for availability to eventually return to equilibrium.”