Manhattan office leasing continued its slow start to the year, with demand in February down more than 18 percent from a year earlier. Two months into 2018, leasing activity is trending downward at a time when the pipeline is flush with new supply.
The market recorded 2.57 million square feet worth of new leases and renewals in February, according to Colliers International. That was down 18.3 percent from February last year, and continued the year-over-year decline recorded in January.
For the first two months of 2018, leasing activity stood at 5.54 million square feet, down 21.6 percent from the same time period last year.
February activity slowed, in part, because there were fewer bigger deals than there were a year earlier.
The lack of any such large leases impacted last month’s numbers,” said Franklin Wallach, managing director of Colliers’ research group. “Comparatively, in February 2017, three leases closed over a quarter of a million square feet.”
February 2017’s banner deals include the Royal Bank of Canada’s renewal for more than 400,000 square feet at Brookfield Place and Spotify’s nearly 380,000-square-foot lease at 4 World Trade Center. Kramer Levin Naftalis & Frankel renewed 265,000 square feet at 1177 Sixth Avenue and Tommy Hilfiger inked a deal for more than 200,000 square feet at 285 Madison Avenue.
But this February there were fewer larger deals. The largest was WeWork’s 167,000-square-foot lease at 18 West 18th Street.
Manhattan’s availability rate in February ticked up to 10.4 percent – its highest point since November 2016. Absorption was negative 1.21 million square feet. Manhattan’s average asking rent dropped .7 percent to $74.19 per square foot.
Craig Caggiano, executive director for Colliers’ tri-state region, did note that the brokerage is tracking several deals over 250,000 square feet anticipated to close in the coming months.
“Additionally, JP Morgan Chase’s deal at 390 Madison will be reflected in March’s leasing activity,” he said.