Manhattan’s office real estate market weakened in August as leasing volume was down 21 percent from a year ago while the availability rate hit a seven-year high, according to a monthly market report by Colliers International.
Manhattan’s availability rate in August jumped by 0.8 percentage points from July to 11.8 percent, the highest since 2013. The rate is 2.1 percentage points higher than a year ago. The spike resulted partly from net sublet availability increasing by 1.31 million square feet for the month.
Sublet inventory accounted for 23 percent of Manhattan availability, the highest share since 2010.
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Businesses typically avoid putting sublet on the market in August because it is a slow month, said Franklin Wallach, Colliers’ senior managing director for New York research. But it appears the pandemic has changed things.
“The trend of sublet space coming back into the market, which we saw picking up toward the end of the second quarter and in July, certainly continued in August,” Wallach said. “August 2020 was a very unique August.”
One notable example of newly listed sublet space is 103,000 square feet of Zillow subsidiary StreetEasy’s 130,000-square-foot office at 1250 Broadway in NoMad. The Seattle-based proptech giant announced in late July that it would offer 90 percent of its 5,400 employees the option of working from home at least part-time.
A Zillow spokesperson, responding to an inquiry about whether its sublease decision was related to its remote-work policy, said, “We’re informally exploring what options we have to right-size our office space in the city. While no decisions have been made, Zillow will continue to have a physical presence in New York City.”
Manhattan’s leasing volume was 1.3 million square feet in August, down by 20.7 percent from 1.64 million a year ago. Average asking rent was $78.01 in August, down by 2.5 percent from a year ago.
“Unless the demand picks up, the availability is poised to continue to increase through the rest of the year,” Wallach said.
Despite the slowdown, August had the biggest deal this year: Facebook’s 730,000-square-foot lease at the Farley Post Office redevelopment owned by Vornado Realty Trust.
Two other major new leases in August were in Midtown: Raymond James Financial leased 144,704 square feet at 320 Park Avenue and FTI Consulting inked a 120,720-square-foot lease at 1166 Sixth Avenue.
Contact Akiko Matsuda at akiko.matsuda@therealdeal.com