Lower Manhattan Office Leasing Back to Post-Pandemic Levels

Office leasing in Lower Manhattan has returned to post pandemic levels after leasing in the neighborhood experienced an inflated level of activity in Q2, primarily due to a single large lease for a government agency, according to the Alliance for Downtown New York. 

Meanwhile vacancy rates have fallen, but remain stubbornly high, while the retail and hospitality markets continued to show positive signs, the organization reports. 

Lower Manhattan recorded 620,066 square feet of new leasing in the third quarter, which marked a decline from the previous quarter’s activity, but a 20% increase from the first quarter of the year. The two largest leases of the quarter included a 183,255 square-foot renewal for the Department of Citywide Administrative Services at 255 Greenwich Street and a 121,904 square-foot relocation from Midtown South to 120 Broadway for Tower Research Capital. The overall vacancy rate fell slightly to 23.9%, but is still up 0.9% year-over-year. 

“While the office market in Lower Manhattan remains sluggish, the neighborhood has been injected with a fresh sense of energy this fall with the opening of the Ronald O. Perelman Performing Arts Center,” Jessica Lappin, President, Alliance for Downtown New York, said in prepared remarks. 

On the retail front, Lower Manhattan saw 12 new openings in Q3, many of which are food and beverage businesses. This included the reopening of Delmonico’s, the steakhouse located at 56 Beaver St. that had been closed since the beginning of the pandemic. Also several Asian restaurants opened, including Dim Sum Palace at 123 William St., ImmThai at 80 Nassau St. and Tsubame at 11 Park Pl. Looking forward, eight retailers announced plans in Q3 to open locations in Lower Manhattan. 

Meanwhile, hotel and tourism numbers continue to rebound. Lower Manhattan saw hotel occupancy rate reach 83% in Q3, nearly reaching parity with pre-pandemic levels. Occupancy growth for Lower Manhattan hotels outpaced the citywide average, which rose by 7% year over year. Daily room rates were 60% higher in Lower Manhattan compared to the citywide average — $300 to $188. The current hotel inventory in Lower Manhattan stands at 9,087 rooms across 43 hotels. There are over 940 rooms across five hotels under construction or under development, including the Warren Street Hotel, a boutique hotel expected to open in early 2024 at 86 Warren St.