Manhattan office leasing soars 60% in July

Midtown is having a moment.

A few big deals boosted the leasing market last month, and the six largest were in Midtown, according to a new Colliers office report. 

Leasing volume grew nearly 60 percent from the previous month and surpassed the 2019 (pre-pandemic) monthly average of about 3.5 million square feet. 

Manhattan’s availability rate fell from 17.9 to 17.6 percent, the sharpest single-month drop in nearly two years. It was the fifth month in a row that the rate either decreased or remained stable. Sublet supply also tightened for the fifth consecutive month, dropping to its lowest level since April 2022.

Blackstone’s extension and expansion at Rudin’s 345 Park Avenue was the biggest lease of the month – and the largest Manhattan deal since 2019. 

“Midtown has had quite a few shining moments over the last four years,” said Franklin Wallach, executive managing director of research and business development at Colliers and author of the report. “The month of July was absolutely one of those shining moments as well.”

The 250,000-square-foot expansion will bring Blackstone’s global headquarters up to 1.06 million square feet of office space across 28 floors. The deal accounted for more than a quarter of Manhattan’s 3.9 million square feet of leasing volume last month. 

Although the Manhattan market has added about 41 million square feet of negative absorption since March 2020, two distinct post-pandemic phases are starting to emerge, Wallach said. 

“Phase One is by and large the period between 2020 and 2022 when most of the available space came up,” he said. “Over the last 24 months, it’s either reversed, stabilized, or if it’s increased, it’s increased at a much slower pace.”

Although leasing volume is on pace to beat last year and possibly surpass 29 million square feet, it remains well below 2019 levels. While office-to-resi conversions are taking large blocks of space off the market and affecting the absorption rate, the pace of demand still has a way to go in to absorb the space that flooded the market during Covid. 

“Getting north of 30 million square feet for the year would definitely be a major milestone in signaling that demand is making its way back,” Wallach said.