Manhattan Office Leasing Grows for Fourth Consecutive Month

Manhattan’s leasing volume grew in August for the fourth consecutive month, reaching 2.54M SF, 9% more than July’s total of 2.3M SF, the strongest monthly volume in 2023 since January.

However, more than a quarter of the surge in demand came from a single lease: the 700K SF extension and expansion inked by Davis Polk & Wardwell at 450 Lexington Avenue.

A new office report from Colliers notes that despite the increase in August, leasing activity in Manhattan was nearly 26% lower in a year-over-year comparison. The 2023 year-to-date total was 17.4M SF in August; if demand continues at the current pace, the full-year volume for 2023 could fall 10.5% below the 2022 total.

Leasing activity posted solid advances in Midtown, which rose 39% to 1.3M SF from July’s level of 950K SF, and Midtown South, which rose to 771K SF from 451K SF the previous month. However, activity Downtown dropped from a total of 921K SF in July to 445K SF in August.

Manhattan’s availability rate was stable, holding at the same level as July—which was at a record high of 17.8%, while absorption was slightly positive, Colliers said. Average asking rents held steady to within a dollar of the July averages in all Manhattan markets.

Although the available supply grew by 78.4% since March 2020 to 96M SF, the gain since August 2022 has been about 6.8%, the reported noted.

Net sublet availability totaled 21M SF in Manhattan in August, the lowest level of sublet supply since January. However, Manhattan’s total sublet inventory increased by 6.1% Y-O-Y, and by 76.4% since the beginning of the pandemic.

Sublet availability in Midtown dropped to its lowest level since August 2022 (6.8M SF) as 194K SF was withdrawn from the market at 1675 Broadway.

The plunge in leasing activity Downtown was attributed to the size of a deal that was transacted in July—the City of New York’s 641K SF lease at 110 William Street, which was the largest single transaction Downtown since 2019.

Midtown South’s asking rent average grew to a record-high $82.78/SF, driven in part by well above average asking rent for the newly listed sublet block at 50 Hudson Yards.

In addition to the Davis Polk & Wardwell’s 700K SF lease, the top Manhattan office lease deals in August included the City of New York’s extension of a 183K Sf lease at 225 Greenwich Street; Tower Research Capital’s signing of a new 122K SF lease at 120 Broadway; L’Oreal Paris’ 67K SF expansion at 10 Hudson Yards; and a 54K SF lease signed by Datadog at 11 Times Square.