As confidence grows, more office tenants shun short-term renewals

But leasing activity remains low compared to before the pandemic

New York /
Jun.June 24, 2021 07:00 AM
The short-term renewal trend in NYC office market is winding down. (iStock illustration by Kevin Rebong for The Real Deal)

The short-term renewal trend in NYC office market is winding down. (iStock illustration by Kevin Rebong for The Real Deal)

In the depth of the pandemic last year, a majority of New York City office tenants facing lease expirations didn’t want to commit to a long-term deal. Instead, they opted for shorter extensions.

The number of short-term renewals — defined as a deal shorter than five years — was up 46 percent in 2020 compared to the year before, according to a CBRE market report. But in recent months, as more New Yorkers got vaccinated, the pace of short-term renewals has slowed.

“While some tenants, particularly smaller organizations, may continue to pursue short-term deals in the near future, the wait-and-see attitude that launched the trend does appear to be passing,” the report stated.

Between April and December last year, 54 percent of all lease renewals larger than 15,000 square feet were shorter than five years, according to the report. That’s quite a change from the pre-pandemic period between January 2019 to March 2020 when the share of short-term deals was just 21 percent.

Short-term renewals signed in the later part of the year included NBCUniversal’s 340,000-square-foot deal at 1221 Sixth Avenue, and Stroock & Stroock & Lavan’s 191,000-square-foot lease at 180 Maiden Lane, according to CBRE. The exact lengths of these renewals were not available.

But the short-term renewal trend has started to shift in recent months as the pandemic waned and various restrictions were lifted. The share of short-term deals among all renewals dropped to 32 percent in the period from January to May this year.

Still, uncertainty clouds the future of the city’s office real estate market.

Only 51 new office leases and expansions larger than 15,000 square feet were signed in the first five months of this year, or 10.2 deals a month, according to CBRE. In 2019 the monthly average was 25.6. The average deal size is also shrinking, from about 60,000 square feet in 2019 to 42,000 square feet so far this year.





    Related Articles

    arrow_forward_ios
    Birch Group President Mark Meisner and 101 Hudson Street in Jersey City, NJ (The Birch Group, Google Maps)
    Birch Group paying $380M for large Jersey City office
    Birch Group paying $380M for large Jersey City office
    290 Motor Parkway, the office of Flexible Business Systems (Getty, Google Maps)
    Long Island IT company wants to build ice rink for employees
    Long Island IT company wants to build ice rink for employees
    39 Clarkson Street (Google Maps)
    Hudson Square office building sold for $46M
    Hudson Square office building sold for $46M
    Fiserv CEO Frank Bisignano (Getty, Wikimedia)
    Fintech firm Fiserv expanding into NJ with new office
    Fintech firm Fiserv expanding into NJ with new office
    Google CEO Sundar Pichai and St. John’s Terminal at 500 Washington Street (Getty, COOKFOX Architects)
    Google’s $2B deal spurs optimism for NYC’s pandemic-battered office market
    Google’s $2B deal spurs optimism for NYC’s pandemic-battered office market
    Google CEO Sundar Pichai (Getty/Illustration by Kevin Rebong for The Real Deal)
    Google says it won’t claim NYC tax breaks
    Google says it won’t claim NYC tax breaks
    A rendering of St. John's Terminal with Google CEO Sundar Pichai (COOKFOX Architects, Getty)
    Google shatters pandemic record in $2.1B office purchase
    Google shatters pandemic record in $2.1B office purchase
    The Centre at Purchase at 1, 2, 3, 4 Manhattanville Road with George Comfort & Sons CEO Peter Duncan (George Comfort & Sons)
    Westchester office park owned by George Comfort & Sons slated for auction
    Westchester office park owned by George Comfort & Sons slated for auction
    arrow_forward_ios

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

    Loading...