That empty feeling: Available office space in Manhattan reaches all-time high

Available office space reached an all-time high in the second quarter, with 70.3 million square feet ready for leasing.

That left 19.7 percent of office space available, the highest since the pandemic began, according to a report from Savills.

The report is another sign of how much the office market is struggling and the extent to which tenants have the upper hand in negotiating leases. Leasing activity fell 12.1 percent in the first half of the year from the same period in 2022, and the pace in the second quarter was a whopping 25.2 percent lower than the pre-pandemic average for April through June.

Further, lease renewals and expansions accounted for 49 percent of activity in the second quarter. This is down from 63.1 percent last quarter, but is still higher than historical levels. It reflects the degree to which leasing activity is failing to put a serious dent in overall available space.

While the tech and media industries continued to lag in leasing activity last quarter, e-commerce giant Amazon renewed 210,000-square-foot lease at 1440 Broadway near Penn Station and signed a new one for 90,000 square feet at 75 Rockefeller Plaza.

Financial and legal services accounted for the highest share by industry. Of the top 10 transactions in the quarter, seven were from those two industries, with Amazon accounting for two of the remaining three.

The largest deal of the quarter was at 110 William Street in the Financial District, where the Department of Citywide Administrative Services took 840,000 square feet in a relocation.

Coming in second was law firm Paul Hastings, which renewed for 277,000 square feet at 200 Park Avenue next to Grand Central Terminal. Third was another law firm — Wachtell, Lipton, Rosen & Katz — which renewed 249,000 square feet at 51 West 52nd Street in Plaza South.

The Financial District continued to struggle to fill space, as its 29.3 percent availability rate was the highest of any submarket in Manhattan. This has dragged asking rents down dramatically to an average of $57.62 per square foot; only the City Hall area has a lower asking rent at an average of $48.56 per square foot.

Atop the asking-rent rankings was Hudson Yards, which is dominated by new, Class A offices. The average asking rent there was $136.97. In second place at $112.07 was Plaza South, which also had the lowest availability rate at 14.2 percent.

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