Absorption levels out as Manhattan’s office market sees strong start to 2017

New York /
Apr.April 18, 2017 02:40 PM

UPDATED, April 18, 5:06 p.m.: Manhattan’s office market saw a strong first quarter to 2017 with more than 9 million square feet of leasing activity. And absorption leveled off in the first three months following a year in which new supply outstripped demand for the first time since 2009.

On the back of large renewals like News Corp./21st Century Fox’s 1.2 million-square-foot deal at 1211 Sixth Avenue and the Royal Bank of Canada’s 400,000-square-foot lease at Brookfield Place, Manhattan registered 9.2 million square feet worth of activity in the first quarter of 2017, according to Colliers International. That was down 4.6 percent from the 9.6 million square feet leased during the first three months of 2016.

Both quarters represented strong starts to their respective years compared to the 10-year benchmark average, but by the end of 2016 absorption had turned negative to minus 3.79 million square feet as leasing activity failed to keep pace with new inventory coming online at places such as the World Trade Center and Hudson Yards.

A year ago, absorption was at negative 1.8 million square feet, and during the last three months of 2016 it was negative 1.7 million square feet.

Through the first quarter of this year, it leveled off to slightly less than negative 128,000 square feet, according to Colliers.

“Despite positive absorption in Midtown and Downtown, negative absorption of 880,000 square feet in Midtown South resulted in relatively flat absorption for the quarter in Manhattan,” said Franklin Wallach, managing director of research for Colliers’ tri-state region.

Manhattan’s average asking rent grew about 2 percent year-over-year to $73.92 per square foot. Overall, Manhattan’s office market showed a healthy start at a time when other segments of New York City real estate are slipping.

The investment-sales market, for example, was off by more than 50 percent during the first half of the year compared to the same time in 2016, which itself was down from the previous year.

“The market is full of speculation as to when this current cycle will end,” Colliers executive director Craig Caggiano said. “First quarter numbers showed a continuation of a healthy market.”

Correction: A previous version of this story incorrectly listed the address of News Corp./21st Century Fox as 1221 Sixth Avenue. It is 1211 Sixth Avenue.

(To see our Manhattan office leasing Deal Sheet, click here)


Related Articles

arrow_forward_ios
Democrats numerous attempts to close the carried-interest loophole have failed
Developers, rejoice: Carried-interest loophole is saved again
Developers, rejoice: Carried-interest loophole is saved again
257-263 West 34th Street and Cornell Realty’s Isaac Hager (Google Maps, Getty)
Isaac Hager seeks bankruptcy for Penn Plaza stake, but Churchill resists
Isaac Hager seeks bankruptcy for Penn Plaza stake, but Churchill resists
RXR CEO Scott Rechler and 620 Sixth Avenue (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Beyond My Ken, CC BY-SA 4.0 - via Wikimedia Commons)
RXR sues insurers over infectious disease coverage
RXR sues insurers over infectious disease coverage
(Illustration by The Real Deal with Getty Images)
Hamptons rental where fire killed 2 skipped safety inspection
Hamptons rental where fire killed 2 skipped safety inspection
Colette at 767 Fifth Avenue and restaurateur Juan Santa Cruz (Colette, Getty,Pablo Costa Tirado (…, CC BY-SA 3.0, via Wikimedia Commons)
Want to join Safra’s private club at GM Building? It’ll cost you $125K
Want to join Safra’s private club at GM Building? It’ll cost you $125K
Tavros Capital’s Nicholas Silvers and Charney Companies’ Sam Charney in front of 24-05 thru 24-19 Jackson Avenue in Long Island City (Getty Images, Tavros Capital, Charney Companies, Google Maps)
Tavros, Charney plan 55-story rental on long-stalled site
Tavros, Charney plan 55-story rental on long-stalled site
A photo illustration of 450 Park Avenue (left) and 8 Spruce Street (right) (Douglas Elliman, Reading Tom, CC BY 2.0 - via Wikimedia Commons, Getty Images)
CRE investment sales hit $21B in first half of 2022: report
CRE investment sales hit $21B in first half of 2022: report
Planet FItness' Chris Rondeau with 177 Old Country Road (Planet Fitness, Google Maps)
Planet Fitness filling Long Island’s retail vacuum
Planet Fitness filling Long Island’s retail vacuum
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...