Manhattan's office sector is continuing its slowdown on a monthly basis, which is now weighing down rents.
In May, leasing activity dropped by seven percent to 3.13 million square feet, which was the market's lowest amount seen since December 2024, according to a Colliers report. But on a year-over-year basis, volume was up by 5.2 percent is up 15.9 percent when compared to the 10-year monthly median. The trends were similar to those seen in April, where volume dropped by 26.2 percent from March while increasing 23 percent year-over-year and 25.4 percent above the 10-year monthly average.
Particularly, the Midtown submarket was hit the hardest with leasing in May, where the volume tanked by 31.2 percent month-over-month and 38.4 percent year-over-year. Midtown South was the only one tracked to see gains, with leasing up 26.2 percent and 95.4 percent in those respective categories.
But now — notably weaker rents are starting to show. The average ask per square foot was just $73.49 in May, down from both $74.37 in April and $74.59 in the 12 months prior. According to Colliers, the 1.2 percent fall versus April was the largest monthly decline in almost three years. Also, rents remain down 7.5 percent since March 2020. Midtown struggled the most in this category last month.
"The average asking rent decreased by 1.7% – the sharpest monthly drop in seven years – to $79.12/SF," Colliers wrote regarding the submarket.
"The notable cut in pricing was mostly due to the above-average priced block of space withdrawn from the market at 522 Fifth Avenue along with the below-average priced available block added at 805 Third Avenue."
Still, strong elements remain for office in Manhattan. For one, availability dipped by 30 basis points versus April and 250 basis points versus a year ago to fall to 15.4 percent. That's the lowest level seen since January 2021. Also, the net absorption of 1.8 million square feet marked the 11th straight month that the category was in positive territory.
New York University had by far the biggest lease in Manhattan during May, with its deal that exceeded more than one million square feet. The next closest was Fox Rothschild, which agreed to extend to 72,750 square feet in Midtown. Aquarian Holdings placed third with its 72,353-square-foot deal in Midtown.
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