Coming off a record year for office leasing in 2019 — the highest since 2001 — February numbers showed a 41 percent drop in month-over-month leasing volume compared to January across all three Manhattan sub-markets, according to Colliers International.
But a drop off in lease volume is typical for February, according to Franklin Wallach, senior managing director of research at Colliers.
“It’s not uncommon to see an effort in the fourth quarter to have pending leases that have been worked on during the year wrapped up and signed before New Year’s,” said Wallach. “In some cases, the official signing of the leases might carry over into January. That is usually a factor in the January monthly numbers,” he said, adding that January leasing has outpaced February every year since 2017.
In February, Manhattan had an average asking rent of $79.25 per square foot, an availability rate of 9.9%, and more than 2 million square feet in leasing activity, according to Colliers and Wallach said the market remains strong.
“Market equilibrium has always been 10% — that’s always been that sweet spot of all things being equal, and for Manhattan, we’re right there,” said Wallach.
A few large deals can often dominate the stats, such as Apple signing a 220,000-square-foot lease at Penn 11, which drove the leasing numbers in February.
Last year saw its share of headline-grabbing deals as well, with Facebook’s 1.5 million-square-foot lease at Hudson Yards, Google’s 1.3 million-square-foot lease at 550 Washington, and Warner Media’s sale and lease-back of 1.3 million square feet at 30 Hudson Yards. But the vast majority of deals are between 5,000 and 15,000 square feet, according to Wallach.
“In 2019, that made up 60% of the number of the transactions for Manhattan office leasing,” he said.
Still, those megadeals do indicate a broad trend in the Manhattan office market.
The close proximity of Apple, Amazon, Google, Facebook and LinkedIn, plus the redevelopment of the Penn Station area and the repurposing of formal industrial space has positioned the former Garment District as a new tech and media hub.
“The former garment manufacturing buildings have been upgraded and converted to appeal to the growing media and tech footprint as they’re priced out of Chelsea and Greenwich Village,” said Wallach. “That all makes for an exciting change for that neighborhood.”