Led by a surge in activity Downtown and massive tech leases in Midtown South, Manhattan’s office leasing market wrapped up 2019 with more leasing volume than any year since 2001, according to new research from Colliers International.
Total leasing activity in Manhattan increased for the fourth year in a row to reach 42.97 million square feet, up 2.9 percent year-over-year and 28.4 percent above the ten-year average. After hitting an all-time high of $79.77 per square foot in the third quarter, average asking rents dipped slightly to $78.78 at the end of the year following a few large above-market deals.
“Even though we saw the strongest leasing volume in almost two decades across Manhattan, 2019 was really the year for the Downtown office market,” Colliers’ senior managing director of New York research Franklin Wallach said in a press release.
“While most of the markets experienced some combination of higher leasing volume, tighter availability, positive absorption or an increase in the asking rent average, Lower Manhattan checked all these boxes,” he said.
Downtown leasing volume increased by nearly 70 percent year-over-year, totalling 10.7 million square feet — the highest total this century, surpassing 2000’s total of 10.04 million square feet. Asking rents hit a new record of $64.64 per square foot.
FIRE (financial services, insurance and real estate) tenants accounted for 40 percent of Downtown leasing activity, and Morgan Stanley’s 1.32 million square foot renewal-expansion at 1 New York Plaza was the largest deal. Public sector tenants were the second-largest industry with 21 percent of leasing activity.
Midtown South had its most active year since 2001 with 16.41 million square feet in leasing activity, a 14.5 percent increase from 2019. With an overall average asking rent of $76.72 at year’s end, Midtown South was also home to Manhattan’s two priciest submarkets — Hudson Yards/ Manhattan West ($121.37 per square foot) and Greenwich Village ($109.92).
TAMI (technology, advertising, media and information services) dominated this part of the island, accounting for 61 percent of all office space leased. In addition to Facebook’s 1.48 million-square-foot lease across three Hudson Yards buildings, the year also saw Google finalize its massive 1.3 million-square-foot lease at Oxford Properties Group’s St. John’s Terminal development in July.
Meanwhile, leasing volume in Midtown proper hit a six-year low of 15.85 million square feet, down 25 percent from 2018. Average asking rents rose to $85.80 per square foot.
FIRE tenants, which include co-working tenants, made up half of Midtown’s leasing activity. The largest lease went to WeWork, which signed a 362,000-square-foot lease at the William Kaufman Organization’s 437 Madison Avenue shortly before shelving its IPO.
Across Manhattan, FIRE tenants held on to a slight advantage with 36 percent of office space leased, while TAMI tenants were a close second with 32 percent.