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Manhattan office leasing elevated greater than 20% in August in contrast with July to 3.7 million sq. ft and was nicely above the 10-year month-to-month common of two.72 million sq. ft, in accordance to a brand new report from Colliers. If demand continues on the similar tempo for the rest of 2025, Manhattan’s yearly volume would exceed 40 million sq. ft for the primary time since 2019.
Over the final 25 years, on common roughly 32 million to 33 million sq. ft had been leased in a given 12 months. In 2024, Manhattan returned to that common for the primary time since the pandemic started in 2020.
“That is a very strong market in terms of demand,” stated Franklin Wallach, govt managing director for analysis and enterprise growth at Colliers.
“Certainly a return to office is a part of that — and low unemployment. You also have a reemergence of some key industries that were a little quieter during the pandemic years, not that they ever went away, but tech in particular comes to mind,” Wallach stated.
He pointed to over 1,000,000 sq. ft of Manhattan office leasing by Amazon alone simply since November 2024. That got here within the type of leases, subleases and enterprise agreements with coworking areas like WeWork, as well as to constructing purchases.
The authorized sector is one other prime instance. In 2023 Manhattan noticed a report 12 months of regulation agency leasing exercise – greater than 4 million sq. ft. Last 12 months was barely decrease, however nonetheless above 2019 ranges.
“You also very much had flight to quality. New construction such as One Vanderbilt, Hudson Yards, Manhattan West, where availability has become very tight in that new product,” stated Wallach.
As a outcome, the provision, often known as the “availability rate,” of newer office house, has dropped to 6.7% in contrast with the speed for older, prewar buildings, at 17%. Manhattan’s general availability price fell to 15%, the bottom since January 2021 and the 18th consecutive month that its availability price remained steady or tightened.
Of Manhattan’s three office subsectors, the provision price tightened in Midtown, Midtown South and Manhattan general throughout August whereas remaining steady downtown.
At the top of August the typical asking lease for Manhattan workplaces was $74.73 per sq. foot, a rise of 1% from July. Compared with March 2020, nonetheless, rents are nonetheless 6% decrease.
“If you have a 1% increase during the month, that is a significant movement. Some of that is above-average-priced space coming onto the market, but we’ve also begun to see more landlords reprice their existing space higher,” stated Wallach.
Office conversions are additionally having a serious influence on each provide and pricing. Colliers tracked practically 9 million sq. ft of office house faraway from the Manhattan market during the last 4 years. That hits not simply provide, but in addition demand and costs.
“We’ve seen, on average, that for every million square feet of office building slated for conversion, on average 270,000 square feet of leasing activity occurs because of the tenants coming out of that building and relocating to another building,” stated Wallach.
In addition, the buildings being transformed possible had below-average-priced house, together with sublet house which can be decrease priced. Their elimination, due to this fact, will increase the typical worth of the general Manhattan market.