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New York

Manhattan office leasing has busiest month of Covid era

Still, 67 percent more space is available than in March 2020: Colliers

Brookfield's Brian Kingston, REBNY's Jonathan Resnick and Silverstein Properties’ Larry Silverstein (Getty, REBNY, Brookfield)
Brookfield's Brian Kingston, REBNY's Jonathan Resnick and Silverstein Properties’ Larry Silverstein (Getty, REBNY, Brookfield)

Companies still want a piece of Manhattan.

Some 3.4 million square feet of office space was leased in August, the most since January 2020, when the first Covid cases began to pop up in New York City, according to a Colliers’ report.

Notably, space in Midtown is steadily getting harder to find. More space was newly leased than became available in Manhattan’s central business district decreased for the sixth straight month, as was the case for Manhattan as a whole.

“If demand continues at the same rate, Midtown is on pace to nearly match 2019 leasing volumes of 15 million square feet,” said Franklin Wallach, director of research at Colliers.

A little more than 1.3 million square feet of office space was leased in Midtown in August, a decrease from the previous month and slightly lower than in August 2021.

Noteworthy deals in Midtown included asset manager Cohen & Steers and hedge fund Brevan Howard signing leases for 161,000 square feet at Minskoff Equities’ 1166 Sixth Avenue and 83,000 square feet at Fisher Brothers’ 1345 Sixth Avenue,  respectively.

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However, Midtown’s available office space has increased by 36 percent since March 2020. Wallach said that number is modest compared to Midtown South (where it has more than doubled), Downtown (up 95 percent), and Manhattan overall (up 67 percent.) Prospective tenants in Manhattan now have approximately 90 million square feet to choose from, according to Colliers.

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Midtown South was the stage for the largest deal this year in New York City: KPMG’s move to Brookfield Properties’ Two Manhattan West, where it will occupy about 450,000 square feet. The tower will serve as the global audit and consulting firm’s headquarters. Another positive sign for office landlords was public relations firm Edelman renewing its 174,000-square-foot lease at 250 Hudson Street.

The good news for Midtown South owners is the neighborhood’s asking rent average was higher than Midtown’s for the sixth consecutive month. Wallach surmised that the growth of TAMI (technology, advertising, media and information) companies, and millions of square feet of new construction and major renovations in nearly all eight Midtown South submarkets, were chiefly responsible for driving up the average asking rent.

Downtown, the deal that made the biggest splash was Freshfields Bruckhaus Deringer signing a lease at Silverstein Properties’ 3 World Trade Center for 180,000 square feet. The New York City Housing Development Corporation inked a deal at 120 Broadway for 109,000 square feet of offices.

Despite Downtown’s availability dropping slightly to 20 percent, Wallach cautioned that there is a long way to go to get back to its pre-pandemic availability of 10 percent. Downtown has more availability than in the aftermath of 9/11 and the Great Recession.

The average annual rents per square foot in Midtown, Midtown South and Downtown in August were $79.55, $80.90 and $59.21, respectively.

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Colliers InternationalCommercial Real EstateManhattan Office LeasingOffice LeasingOffice Market