Demand for Manhattan office space “lost some momentum” in May, according to Cushman & Wakefield’s latest office market report, which noted that monthly leasing activity in the borough fell below 2 million square feet for the first time this year.
There were 1.8 million square feet of new Manhattan office leases signed last month, the brokerage noted, the lowest level of monthly leasing so far in 2016. Year-over-year, leasing activity is down 13.5 percent.
But overall vacancy “declined slightly” to 9 percent in May – a reduction of 10 basis points, or 0.1 percent – due to “a noticeable reduction in the amount of new space added to the market,” Cushman said.
“Despite a slowdown in leasing velocity in May, a minimal amount of new supply hit the market, allowing for the overall vacancy to drop,” said Richard Persichetti, research director for Cushman in the Tri-State area.
Overall Manhattan average asking rents climbed to $72.81 per square foot last month, up 3.8 percent from $70.13 per square foot in May 2015. Midtown rents, in particular, were strong, jumping 3.6 percent year-over-year to $79.04 per square foot, which Cushman noted was the highest level since December 2008.
The largest Manhattan office lease signed in May was Swiss banking giant UBS’s 900,000-square-foot renewal at RXR Realty’s 1285 Sixth Avenue in Midtown.