NYC Downtown Office Activity Highlights a Busy Q3

NYC Downtown office leasing activity led a busy Q3 for the country’s most crucial market, according to Colliers’ Q3 NYC Office report issued Monday.

All five Downtown submarkets posted quarterly gains in leasing activity for the first time since Q4 2018.

The World Trade Center submarket was particularly active, with leases by Freshfields, Jane Street Capital and the Manhattan District Attorney’s Office accounting for more than half of Downtown’s leasing volume.

Midtown’s quarterly leasing volume jumped by more than one-third since Q2 2022. Meanwhile, the average asking rent decreased despite tightening supply and positive absorption, according to the report.

Lower Manhattan leasing activity more than doubled, quarter-over-quarter. Yet, the available inventory increased to a record-high with negative absorption while the asking rent average decreased since Q2 2022, according to Colliers.

Manhattan to Have ‘Best Year Since 2019′

According to Avison Young’s Third Quarter 2022 Office Market Report for New York issued Monday, there are positive signs of increased leasing activity.

Danny Mangru, Innovation & Insights Regional Manager, Avison Young, said that the Manhattan office market is on track to have its best year of leasing activity since 2019 as large transactions continue to bolster leasing.

“Avison Young is seeing tenants willing to sign large commitments for longer lease terms than they were last year and as these numbers rise, along with return to office efforts hovering around 50%, we should expect strong demand to continue through year-end.”

Additionally, the Avison Young report indicated that large transactions continue to bolster leasing activity. Leasing activity was up 17.4% from last quarter and the cumulative leasing activity from Q1 to Q3 2022 is 19.9% greater than Q1-Q3 2021.

“This increase is due to the high volume of large transactions in which 33 deals over 100,000-square-feet (sf) have been signed between Q1 and Q3 (20 in 2021),” the firm said.

Kent Avenue Affects Brooklyn’s Availability Rate

As for availability rate, Colliers said Brooklyn’s increased by 1.2 pp (percentage points) since the prior quarter to 21.1%, marking the borough’s largest quarterly gain since Q4 2020 due to the addition at 300 Kent Avenue, due to 405,000 sq. ft. of above-average priced space added to the available inventory, Colliers reported.

Midtown’s availability rate tightened by 1.1 pp (percentage points) to 15.3%.

Midtown Asking Rent Drops Third Straight Quarter

Class A asking rents in Midtown decreased – for the third consecutive quarter – by 1% to an average of $82.19/SF. Meanwhile, the Class B asking rent average shrank by 4.1% to $59.70/SF due to lower repricing in pockets of the Class B inventory.

Meanwhile, Brooklyn’s asking rent average increased by 8.1% since March 2020, according to the report.

NYC Foot Traffic Strongest in Country

A recent Placer.ai foot traffic report showed that New York City’s office foot traffic was stronger in September than in any other large US gateway city.

GlobeSt.com reported that foot traffic to NYC offices has outpaced the national average and that of other major cities in both the year-over-three-years and year-over-year monthly office foot traffic metrics.

In September, Manhattan offices saw a visit gap of 37.1% compared to 2019, and a 31.1% year-over-year-increase. Nationally, foot traffic is down 41.2% year-over-three-years and up 11.4% year over year.