Manhattan office leasing just had its most active year since 2001

Leasing activity slowed at the end of the year

New York /
Jan.January 03, 2020 02:15 PM
437 Madison Avenue, 50 Hudson Yards, and 1 New York Plaza (Credit: 437 Madison, Hudson Yards, Wikipedia)

437 Madison Avenue, 50 Hudson Yards, and 1 New York Plaza (Credit: 437 Madison, Hudson Yards, Wikipedia)

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.


Related Articles

arrow_forward_ios
Non-New York residents who worked remotely last year will still have to pay New York taxes. (iStock)
NY tax officials crack down on remote workers
NY tax officials crack down on remote workers
SL Green's Marc Hollday, 635-641 Avenue of the Americas, Infor's Kevin Samuelson. (Infor, SL Green)
Software company Infor renews 90K sf Chelsea lease
Software company Infor renews 90K sf Chelsea lease
1540 Broadway and 31 West 52nd Street (Google Maps, Hines)
Manhattan office availability hits record high…again
Manhattan office availability hits record high…again
Vornado’s Steve Roth with Penn1, Penn 2 and the Farley Building (Getty, VNO)
Vornado’s Roth “disappointed” in lack of distress as market shows signs of recovery
Vornado’s Roth “disappointed” in lack of distress as market shows signs of recovery
Photo illustration of CoStar CEO Andrew Florance (iStock, CoStar)
CoStar lures workers back to offices with cash prizes, Teslas
CoStar lures workers back to offices with cash prizes, Teslas
440 West 57th Street and 15 Park Row (Google Maps)
NY investment sales hit lowest point since pandemic began
NY investment sales hit lowest point since pandemic began
Empire State Realty Trust CEO Anthony Malkin and the Empire State Building (Getty, iStock)
Empire State Building owner endures painful wait for tourists’ return
Empire State Building owner endures painful wait for tourists’ return
Paramount Group CEO Albert Behler and 1301 Avenue of the Americas. (Paramount)
Paramount Group preps for $850M refinance
Paramount Group preps for $850M refinance
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...