On the coattails of another record year for commercial office leasing in Manhattan, the start of 2019 saw more than 9 million square feet leased.
First quarter figures recorded a 20 percent increase year-over-year from 2018 to 9.07 million square feet, according to data provided by Colliers International.
“Fears of an interest rate increase have abated and there is no shortage of available capital, foreign and domestic, interested in New York City assets,” said David Amsterdam, the co-head of Colliers U.S. Capital Markets division.
The Plaza District neighborhood led Manhattan leasing for the fifth consecutive quarter, with 1.61 million square feet between January and March. Downtown leasing volume doubled to 2.56 million square feet, a 6.4 percent increase on the last quarter of 2018. This was in part due to the We Company’s 201,000 square foot lease at Jack Resnick & Sons’ 199 Water Street.
However, Midtown South took a hit in leasing volume, posting a year-over-year decline by 17.1 percent for the first quarter of 2019, with 2.22 million square feet leased. The figure was down 47.2 percent from December 2018.
Asking rents also reached record highs following five consecutive quarters of growth, with the first quarter of 2019 peaking at an average $76.57 a square foot, up from $73.06 from Q1 2018
Financial services, which includes insurance and real estate, led transactions with 39 percent of the leasing activity — almost 13 percent of that made up by co-working companies. That’s a slight jump from 2018, which recorded 12 percent of leasing volume conducted by co-working companies, up from 5 percent in 2017.
The sector was also boosted by half a dozen Midtown deals over 100,000 square feet, Sumitomo’s 266,000 square foot renewal and expansion at 277 Park Avenue and the Bank of Montreal’s 215,000 square foot relocation to 151 West 42nd Street.
Technology, advertising, media and information services — known collectively as TAMI — followed with 16 percent of leasing volume in the first quarter.
The buoyant figures have also been bolstered by job growth in New York City, which increased by 1.8 percent with 68,700 jobs added by the private sector from February 2018 to February 2019. The unemployment rate for New York City hovered around 4.6 percent, a full percentage point above the record low of 3.6 percent in May 2018.
Investment sales for the start of 2019 were down from last year’s first quarter to $3.97 billion, a drop from $5.2 billion. This was in large part due to a lack of foreign investment, which made up only 10 percent of sales, a steep decline from 29 percent.