Manhattan Office Leasing Jumps to Its Highest Level Since 2019
(Bloomberg) -- Manhattan’s office market had its strongest quarter for leasing since late 2019 as demand rebounds from pandemic lows.
Deals were signed for 7.2 million square feet (669,000 square meters) in the third quarter, up 59% from the previous three months, Colliers said in a report Friday. While that’s the highest total in almost two years, it is still 12% below the borough’s five-year rolling average, according to the brokerage firm.
“As the Manhattan market continues its post-pandemic recovery, the critical milestone of demand outpacing supply was reached this quarter,” Franklin Wallach, a senior managing director at Colliers, said in the report.
Financial, insurance and real estate firms led leasing in the quarter, followed by technology, advertising, media and information-services firms.
The pandemic slammed Manhattan’s office market, leaving it with a record amount of available space. Demand has begun to revive, with tech companies including Facebook Inc. and Microsoft Corp. exploring new leases, even as they delay return-to-office plans or embrace long-term hybrid work.
While asking rents have mostly stabilized, falling less than 0.1% from the second quarter, the average of $72.74 a square foot was the lowest since 2017. Rates are down 8.5% since the start of the pandemic.
The amount of offices listed by tenants for sublease declined for a second straight quarter, Colliers said. But total available sublet space has increased 68% from March 2020 -- and more is scheduled to enter the market in the coming months, according to Wallach.
That’s “creating pressure on this healthy demand to not only continue, but increase,” he said.
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