Manhattan office leasing is closing in on a strong finish to the year, as Facebook’s massive Hudson Yards deal pushed November’s leasing activity to a 5 percent increase year-over-year.
The social media giant’s 1.5 million-square-foot lease across 30, 50 and 55 Hudson Yards accounted for nearly 40 percent of the island’s 3.87 million square feet of office space leased last month, according to the latest market snapshot report from Colliers International.
“We are very close to ending the year on par with the strong year of leasing we saw in 2018,” Colliers senior managing director and Northeast region research lead Franklin Wallach said, noting that last year’s total of nearly 42 million square feet was the most activity the city had seen in 20 years.
“The large tech leases from Facebook, Amazon, Google and so on formed a core of large deals that helped move the needle, much like financial services did in the 1990s,” he said. “But it’s important to note that the majority of the activity has always been driven by the 5,000- to 15,000-square-foot tenants. Two thirds of Manhattan leasing is driven by tenants of that size.”
At the same time, by taking large blocks of above-average-priced space off the market, Facebook’s lease helped bring Manhattan’s average asking rent down a notch to $79.12 per square foot — still a very high figure, historically speaking.
Average asking rent had reached an all-time high of $79.77 at the end of the third quarter, the seventh consecutive quarter of growth, and the current average is still well above mid-2019’s then-record $77.82.
Apart from Facebook, Manhattan’s second-largest new lease went to another TAMI tenant, Japanese digital marketing firm Dentsu Aegis Network, which signed a signed a 15-year, 320,000-square-foot lease to anchor Tishman Speyer’s redevelopment of the upper floors of the Morgan North Post Office building at 341 Ninth Avenue.
While the month’s largest leases were concentrated in Midtown and Midtown South (with Hudson Yards straddling the increasingly blurred border between the two), Downtown saw its availability rate fall to a post-recession low of 10.5 percent despite a relatively slow month of leasing. The submarket’s average asking rent also hit a new record for the fourth month in a row, reaching $64.45 per square foot.
Downtown’s largest deal in November went to Frank Recruitment Group, which will be consolidating its offices into about 35,000 square feet on the entire 10th floor of Jack Resnick & Sons’ 199 Water Street.
With just a few weeks left in the year, it remains to be seen whether 2019 will match or surpass last year’s total, but if Amazon’s recent 335,000-square-foot-lease near Hudson Yards is any indication, the odds of hitting another twenty-year-high seem pretty good.
“December is historically an active month, and the last few weeks of the month are a busy time with so many deals closing before year end,” Colliers executive director Craig Caggiano said. “I think it’ll be interesting to see where we net out, in terms of the whole year, come January.”