Large, six-figure leases drove Manhattan’s office market last year to its second most-active year in more than a decade. And while the start of 2018 saw its share of big deals, they weren’t as big as the blockbusters that kicked off 2017.
Manhattan leasing activity totaled 2.96 million square feet in January, down roughly 34 percent from a year earlier, according to Colliers International.
January 2017 saw some unusually large deals, such as the 768,000-square-foot renewal and expansion by 21st Century Fox (which ended up being the second-largest deal of the year) and News Corp.’s 440,000-square-foot renewal – both at 1211 Sixth Avenue.
The top five renewals and new leases of January 2018 were quite a bit smaller, though they all crossed the 100,000-square-foot mark, including Simon & Schuster’s 300,000-square-foot renewal at 1230 Sixth Avenue, Greenberg Traurig’s 133,000-square-foot lease at One Vanderbilt and Liquidnet’s 126,000-square-foot sublease at the New York Times building at 620 Eighth Avenue.
Manhattan’s monthly average asking rent climbed 1.7 percent year-over-year in January to $74.70 a square foot as more expensive blocks of space were added to the market and less expensive ones were taken off, according to Colliers.
Absorption was negative at 1.05 million-square-feet as all three markets saw large blocks of added inventory. And that’s a figure the industry is likely to keep its eye on this year. An influx of new supply not seen since the mid-1980s is set to hit Manhattan over the next two years, and there are questions as to whether demand – while robust last year – can absorb all that extra space.
While the local economy is still adding new jobs, the rate of growth has slowed over the past two years, and experts say it could become increasingly difficult to hire new employees to fill all that additional office space in the pipeline as the employment market gets tighter.