Manhattan office availability hits all-time high in Q1

Available space hit 16%, highest it’s been since 2003

New York /
Apr.April 01, 2021 09:00 AM
345 Park Avenue and 787 Eleventh Avenue (Photos via Google Maps and Rafael Viñoly)

345 Park Avenue and 787 Eleventh Avenue (Photos via Google Maps and Rafael Viñoly)

Supply and demand for Manhattan office space continue to be misaligned in the new year — there’s too much of the former, and not enough of the latter.

Office availability in the borough hit 16.1 percent in the first quarter of 2020, the highest number on record, according to Colliers International’s latest quarterly report. That’s a jump of 5.9 percentage points compared to the same time last year, and 1.8 percentage points higher than the fourth quarter of 2020.

You’d have to go back to the second quarter of 2003 for the previous record of 13.9 percent availability.

The effect of this supply glut, according to Franklin Wallach, Colliers’ senior managing director for New York research, is “measurable downward pressure on pricing.”

The average asking rent was $73.23 per square foot, down 7.6 percent from a year ago, and down 1.6 percent from the fourth quarter of 2020. That’s the lowest it’s been since 2018.

Leasing volume in the first quarter was 4.6 million square feet, down by 36 percent compared to the same period last year, but up 9.4 percent compared to the fourth quarter of 2020. That improvement, however, was not enough to counterbalance the supply increase: Negative net absorption was nearly 11 million square feet in the first quarter, or 365,000 square feet less than at the end of 2020.

The borough’s subtlet availability increased by 2.91 million square feet during the first quarter, bringing the total share of space available for sublease to 24.5 percent.

The biggest leases signed during the first quarter include Blackstone Group’s 720,000-square-foot renewal at Rudin’s 345 Park Avenue, and Icahn School of Medicine at Mount Sinai’s 167,348-square-foot lease at Georgetown Company’s 787 Eleventh Avenue.

Office investment sales remained “largely halted” in the first quarter, with only $400 million in total volume. That’s a decrease of nearly 90 percent compared to the first quarter of 2020, when $3.8 billion in deals was recorded, according to the report.

The biggest office investment deal was Brookfield Asset Management’s acquisition of a 25 percent stake in Tower 46 from SL Green for $275 million. The Kaufman Organization’s $35 million leasehold purchase of the Haymarket Building at 135 West 29th Street also closed in the first quarter.





    Related Articles

    arrow_forward_ios
    General Assembly's CEO Lisa Lewin (General Assembly)
    General Assembly renews 40K sf lease in Flatiron District
    General Assembly renews 40K sf lease in Flatiron District
    HqO CEO Chase Garbarino (HqO via Facebook)
    Big landlords invest $60M in “tenant experience” startup HqO
    Big landlords invest $60M in “tenant experience” startup HqO
    Doctors and medical professionals have remained on time with their rent payments in the past year (iStock)
    Medical offices are just what the doctor ordered for landlords
    Medical offices are just what the doctor ordered for landlords
    A rendering of 85 Jay Street and RXR Realty CEO Scott Rechler (Winick, Getty)
    RXR makes $220M apartment bet in Brooklyn
    RXR makes $220M apartment bet in Brooklyn
    Thor Equities Group Chairman Joseph J. Sitt. (Thor)
    Thor facing foreclosure on Harlem rental building
    Thor facing foreclosure on Harlem rental building
    Photo illustration of Vornado CEO Steven Roth and Hotel Pennsylvania at 401 Seventh Avenue (Getty, iStock, Vornado)
    “Inevitable”: Vornado will demolish Hotel Pennsylvania
    “Inevitable”: Vornado will demolish Hotel Pennsylvania
    The rate of loans sent to special servicers continued to fall in March. (Unsplash)
    CMBS special servicing rate declines in March
    CMBS special servicing rate declines in March
    JLL CEO Christian Ulbrich. (Getty)
    JLL explores sale of China property management wing
    JLL explores sale of China property management wing
    arrow_forward_ios

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

    Loading...