Manhattan’s November office leasing surpassed pre-pandemic levels

Peak in market’s recovery came weeks before coronavirus case surge

(iStock/Illustration by Kevin Rebong for The Real Deal)
(iStock/Illustration by Kevin Rebong for The Real Deal)

Manhattan’s office market had a breakthrough in November, but details of the peak in activity come as New York City weathers a surge in coronavirus cases and concerns over a new variant.

Leasing activity in Manhattan last month surpassed activity seen in 2018 and 2019, according to a CBRE report measuring the top 12 office markets in the country reported by the Commercial Observer. Finalized lease agreement volume was 2 percent greater than in those two years.

“We’ve gotten close a few times, but this is the first time we’ve crossed over that baseline [since the pandemic hit],” CBRE’s senior director of research and analysis Nicole LaRusso told the Observer.

Sublease space available in Manhattan ticked down last month, but there was still 86 percent more available sublease space than pre-pandemic levels. The Observer also noted tenants were seeking 1 percent less square footage overall than pre-pandemic levels in November.

The CBRE report echoes the strong takeaways detailed in Colliers’ monthly market snapshot. The report, published earlier this month, showed tenants in Manhattan signed more than 3 million square feet of leases in November, marking the first month to hit that figure since January 2020.

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Colliers reported leasing volume rose 14.8 percent from October to November. Year-to-date, leasing volume is up 27.4 percent from 2020, although it remains 41.1 percent lower than 2019 levels, according to the report.

Even as of late November, the Omicron variant did not appear to be a major consideration for companies and prospective tenants seeking office space. But the variant has sparked a surge of cases and sparked a response from employers like Douglas Elliman, which told New York City employees to work from home until at least Jan. 3.

“Leasing volume has certainly picked up compared to 2020, but there’s still a significant road ahead in terms of catching back up to the pre-pandemic leasing volume,” said Franklin Wallach, Colliers’ senior managing director for New York research.

Manhattan’s office market enjoyed consistent recovery through 2021, even amid hybrid work arrangements and delayed office-return dates.

A previous report by Cushman & Wakefield published in September predicted workers would largely return to their office desks in the first quarter of 2022. The forecast came before the emergence of the Omicron variant, and was based on a prediction that Delta variant infections would peak in October or November of this year, then trend downward.

[CO] — Holden Walter-Warner

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