Lower Manhattan has seen just limited leasing growth in the second quarter in the office sector and remains still well behind in post-pandemic performance.
A report from Alliance for Downtown New York showed that leasing was up just by one percent for the three months ending June compared with the first quarter. That’s down 17 percent in the post-pandemic world and a dip of 25 percent versus the five-year average. Plus, leasing tumbled 48 percent year-over-year. Financial and software firm Stripe, owned the biggest lease of the second quarter thanks to its 147,509 square-foot space at 28 Liberty Street.
New leasing space in the area amounted to 589,000 square feet in the second quarter. The sector that showed the most demand was technology, which represented 36 percent of the total space leased. The legal and finance industries followed with 15 percent apiece.
Other places in Manhattan performed better including Midtown, with leasing rising five percent to 3.89 million square feet from the first quarter and 54 percent year-over-year. And Midtown South exploded with a 128 percent surge in leases from the first three months and up 114 percent from the same period in the previous year.
While the growth has nearly stagnated in Lower Manhattan, it might not be a demand issue. The area for the second consecutive quarter sustained positive absorption, with 26,000 square feet. Year-to-date, the figure is at 696,000 square feet. This is thanks to “more office space leaving the market than entering due to residential conversions,” Alliance said. Particularly, conversion projects are happening a 222 Broadway, and 111 Wall Street.
Also, the hospitality sector shined in lower Manhattan. For example, hotels posted a strong occupancy rate of 89 percent. Alliance said that was the highest mark on its record. And prices for daily room rates were at an all-time high of $317.06.
“While the office market remains slow but stable, our hospitality sector has taken off, with record numbers of visitors filling up our Lower Manhattan hotels,” Jessica Lappin, president of Alliance said.
“Tourism is back across the city but our hotels have eclipsed even the Midtown and city-wide occupancy rates.”