Premium Office Leases Surged in Manhattan Last Year
Year-end report says record 190 leases inked for more than $100/SF.
The flight to quality by office tenants isn’t having a huge effect on overall occupancy levels—which still are struggling to get over 50% in the top US markets, according to Kastle’s latest weekly barometer—but it has created a bonanza of premium-priced leases in NYC.
According to JLL’s Year-End Recap, 190 Manhattan office leases were priced at more than $100 per SF in 2022, up from the previous record of 164 in 2021.
These premium leases encompassed 6.1M SF, more than double the space of the top-dollar leases in 2021 and about 25% of the overall of leasing total of 24.3M SF for Manhattan in 2022. The 2022 leasing total represented a 24% increase over leasing activity in 2021 but was still well below the 25-year pre-pandemic average of 35.5M SF.
An unprecedented 15 lease transactions in Manhattan had starting rents of more than $200/SF, including two leases signed at SL Green’s One Vanderbilt that were priced at $300 per SF, JLL’s report said.
There were 77 Manhattan buildings in the $100/SF-plus club in 2022, up from 56 in 2021, JLL said.
Manhattan office leasing in 2022 was dominated by flight-to-quality deals, with 62% of leases—an estimated 3.8M SF—going to new towers or older ones that recently have been upgraded.
“The record number of premium rent leases signed in 2022 is further evidence of resiliency and relevance in top of the market properties, said Cynthia Wasserberger, JLL vice chairman, in a statement.
“Many tenants elected to commit to higher-end space while focusing on right-sizing their operations post-COVID. The trend of ‘paying more for less’ and prioritizing quality over quantity has benefited top properties more than ever,” Wasserberger said.
According to JLL’s year-end recap, landlords who landed the most premium-rent tenants included Brookfield Properties, with 16 deals encompassing 1.6M SF; SL Green with 17 deals totaling 842K SF; Related Companies at 11 leases totaling 702K SF; and RFR Realty with 19 deals totaling 386K SF.
RFR’s Seagram Building at 375 Park Avenue secured the largest number of $100-plus lease transactions for a single building in Manhattan with 17 deals, a third of which were priced over $200/SF.
As it did in 2021, the financial services sector accounted for nearly three-quarters of the premium office leases in 2022 in Manhattan, JLL said.