An early holiday present: Manhattan office leasing already surpassed 2016’s total

November’s run of big-ticket deals help boost an already healthy market
By Rich Bockmann | December 05, 2017 07:00AM

from left: 1 Manhattan West, 7 Times Square and 1271 Sixth Avenue

While 2017 has been a year full of gloom for certain segments of the real estate market, Manhattan’s office-leasing market remains a source of cheer. Demand for Manhattan office space has already surpassed the 33 million square feet leased last year, thanks to a handful of big-ticket deals that closed in November.

In fact, through November, leasing activity is ahead of the full-year totals for seven out of the last 10 years, according to Colliers International.

“From the demand side, it really is a remarkable market,” said Craig Caggiano, executive director for Colliers’ tri-state region. “We are tracking some sizable transactions that have the possibility to close by the end of this month and that could change the position of 2017 relative to the last 10 years.”

Deals like EY’s new lease for 600,000 square feet at Brookfield Property Partners’ 1 Manhattan West and Ann Taylor parent company Ann Inc.’s nearly 300,000-square-foot renewal at Boston Properties’ 7 Times Square helped push the island’s year-to-date leasing totals through the end of November to 33.11 million square feet.

That’s just a hair ahead of the 33.1 million square feet leased through all of 2016 – with another full month to go to pad 2017’s numbers.

The 3.59 million square feet leased in November represents an 82.4 percent increase over the total from November of last year. Manhattan’s average asking rent rose nominally from October to $72.05 per square foot.

Midtown leasing more than doubled year-over-year on the backs of the aforementioned EY and Ann Inc. deals, as well as Mizuho America’s lease for 270,000 square feet at the Rockefeller Group’s 1271 Sixth Avenue and the Canadian Imperial Bank of Commerce’s 138,000-square-foot renewal at Hines’ 425 Lexington Avenue.

The office-leasing segment remains a bright spot in New York City’s real estate market compared to other sectors such as retail and luxury residential, which have seen volumes drop off as prices corrected from unsustainable highs.

“Leasing year to date has included a mix of deals,” said Franklin Wallach, managing director of Colliers’ New York research group. “Part has been new construction; part has been large tenants deciding to stay in place and renew.”

Manhattan is on track to record its most-active year since 2014, when tenants inked 37.38 million square feet worth of deals, according to Colliers.