The Real Deal New York

Demand for Manhattan office space on track to set a new post-recession record: Colliers

Leasing activity hasn't been this robust since 2002
By Rich Bockmann | October 02, 2018 05:45PM

From left: 4 World Trade Center, 277 Park Avenue, and 21 Penn Plaza (Credit: Wikipedia and 277parkpenthouse)

Demand for Manhattan office space is on track to set a new record for leasing activity in the past 15-plus years.

Through the first nine months of the year, Manhattan has recorded more than 29 million square feet worth of new deals and renewals, according to Colliers International.

“[The third quarter] was the strongest quarter in four years,” said Franklin Wallach, managing director of Colliers’ New York research group. “And year-to-date, 2018 has surpassed year-to-date activity for every year since 2002.”

Heading into the last three months of the year, 2018 is slightly ahead of the 28.91 million square feet worth of deals inked through the last nine months of 2014, which ended on a post-recession record of more than 37 million square feet.

If 2018 does indeed best the total from four years ago, it would be the strongest year for leasing since 2002, when tenants inked an all-time high 40.8 million square feet worth of deals.

Wallach said activity then was boosted in part by a slew of tenants being displaced and relocating in the aftermath of the 9/11 terror attacks.

Some of the larger deals from the third quarter include JPMorgan Chase’s 855,000-square-foot renewal at 277 Park Avenue, WeWork’s new lease for 258,000 square feet at 21 Penn Plaza and Spotify’s 86,000-square-foot expansion at 4 World Trade Center.

Absorption on the quarter was relatively flat at about 110,000 square feet. Normally, flat absorption wouldn’t be much to celebrate. But considering the fact that Manhattan is seeing such an influx of new office space, the steady rate signifies demand has been able to keep up with the new supply.

“Demand drives markets and demand has been strong for the year,” Colliers executive director Craig Caggiano said. “Absorption is holding flat and the availability rate is relatively stable, despite an increasing supply.”