November Office Leasing in Manhattan Rose Nearly 15%

The Manhattan office market showed signs of life last month, with monthly leasing activity hitting levels four times higher than a year ago. 

About 3.09 million square feet of office space was leased in Manhattan in November, an increase of 14.8% over October levels and well above the 0.79 million square feet leased the same time last year, according to new research from Colliers. November also marked the first month since January 2020 where leasing activity hit more than 3 million square feet.

The rate of available space across Manhattan tightened by 0.1 percentage points to 16.9% in November, a negligible uptick when measured against the overall availability rate increase since March 2020: 68.6%, or 90.81 million square feet.  It was a similar story for sublease availability: while the net amount decreased for the fourth consecutive month, the total sublet inventory has increased by 63.5% since last March, to 19.46 million square feet 

Overall asking rents increased for the third straight month to $74.14 per square foot. Midtown South was a standout and the only market to pass its pre-pandemic asking average; rents in the submarket have increased by 14.1% from their post-pandemic low and are now at $77.95 per square foot. Despite that jump, the availability rate in the submarket still ticked up by 0.1 percentage point to 16.4%, an increase Colliers says was primarily driven by a 250,000 square foot-plus block of space listed at 50 Hudson Yards. Since March 2020, the available supply of office stock has more than doubled to a total of 1.03 million square feet.

Three of the top five lease transactions in November were in Midtown South, and included the 428,000 square foot lease at Penn 2 by MSG Entertainment Group, the 148,000 square foot lease at 122 Fifth Avenue by Microsoft, and a 119,226 square foot lease at 85 Tenth Avenue by CLEAR (Security Identity LLC).  All three were new leases. 

Other notable leases, both in Midtown, include Chubb’s new 241,647 square foot space at 550 Madison Avenue and Dechert LLP’s renewal of 241,000 square feet at 3 Bryant Park.

The activity comes amidst conflicting data on how many people are actually returning to offices across Manhattan. At the end of summer, stats from Cherre regarding  the Manhattan office occupancy rate—the number of people in on a given day—was only about 20% on average. By November, new survey information from major employers by the Partnership for New York City, suggested that on an average weekday, only 28% of workers were in the office, with more than half fully remote.  But employers surveyed by PFNYC say they think that by the end of January, 57% of workers will be back three days a week.

“A third of employers expect that their office space needs will decline over the next five years and 13% anticipate a reduction in jobs located in New York City, with the greatest job losses in the financial services industry,” stated PFNYC in its post.