The Real Deal New York

Manhattan office leasing edges ahead at year’s midway point

Activity is 1% above the first half of 2017, but absorption was negative as new space comes online
By Rich Bockmann | July 06, 2018 07:00AM

From left to right: Rob Lapidus, David Levinson, and 390 Madison Avenue and Rob Speyer and the Spiral at Hudson Yards (Credit: L&L Holding and The Spiral NY)

Manhattan office leasing at the midway point of 2018 is slightly ahead of where it was this time last year.

Through the first six months of the year, Manhattan recorded 17.92 million square feet of new leases and renewals, according to Colliers International. That was 1 percent above the first-half total for 2017, and 1.5 percent above Manhattan’s five-year average.

David Amsterdam, president of investments and leasing for Colliers’ Eastern region, said consistent job creation and steady economic growth have led to “a stable momentum of leasing activity” through the first half of the year.

During the 12 months since May of last year, the city added 79,500 private-sector jobs for a 2.1 percent annual increase, above the national rate of 1.9 percent. And unemployment as of the end of this past May was at a historic low of 3.4 percent.

Leasing activity in 2017 was at its second-highest level in more than a decade, and 2018 has the potential to top last year’s total. But velocity will need to remain robust in order to absorb millions of square feet of new supply set to come online in the next few years.

“Supply remains at near equilibrium level availability, but demand will need to stay healthy to keep pace with the growing inventory of new space anticipated to hit the market,” Amsterdam said.

Despite the brisk pace of leasing, absorption for the half was at negative 1.97 million square feet.

Pfizer’s 800,000-square-foot lease at Tishman Speyer’s Spiral development in Hudson Yards was the largest lease of the first half of the year. JPMorgan Chase signed on for 418,000 square feet at 390 Madison Avenue as it prepares to tear down and redevelop its headquarters at 270 Park Avenue, and law firm Latham & Watkins took 407,000 square feet at 1271 Sixth Avenue.

Discovery’s 362,000-square-foot lease at 230 Park Avenue South and J. Crew’s sublease with Bank of New York Mellon for 325,000 square feet at 225 Liberty Street rounded out the top five deals of the half.