Manhattan’s office market reached another record in the first quarter — but, in a familiar refrain since the onset of the pandemic, it’s not a good one.
The availability rate in the first quarter reached 19 percent, according to Savills Research data reported by Bloomberg. It’s the highest availability recorded by Savills going back to 2000.
The Financial District is one of the biggest contributors to the record. More than 25 percent of the neighborhood’s offices are available to rent, according to Bloomberg, up from 17 percent a year ago.
Savills cited massive redevelopments as a likely cause of the neighborhood’s sharp rise in availability from the previous year, along with prospective tenants’ interest in “top-tier” space.
“There could be some blocks left behind as tenants shifted to higher-quality space,” Sarah Dreyer, Savills senior vice president of research and data services, told Bloomberg.
The news isn’t all bad for the borough’s office market. Asking rents have ticked up from their pandemic lows, with the quarterly average up 1.7 percent to $77.34 per square foot. In Midtown, the average asking rent was even higher at $83.70 per square foot.
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Landlords are likely still pocketing less money as plenty are still offering concessions, abatements and tenant improvement allowances. The office picture may not get better anytime soon, either, as companies continue to reevaluate office needs at a time when remote and hybrid work have become more prominent.
JPMorgan Chase, the largest office tenant in the city, reportedly cut its commercial footprint by 400,000 square feet last year. That follows a downsizing by the financial titan of 300,000 square feet in 2020, though the institution still rents 8.7 million square feet in the city.
Wells Fargo is another major company that reduced its office footprint significantly in 2021, cutting 600,000 square feet of commercial space in the city. Bank of New York Mellon, financial index provider MSCI and insurance firm Voya Financial are also downsizing office space across the country.
[Bloomberg] — Holden Walter-Warner