It might be hard to believe, but Manhattan's office sector might soon be in a better position than it was before the pandemic began — at least from a leasing perspective.
July marked another strong month for the market, as leasing surged by 10.7 percent to about 3.01 million square feet, a report from Colliers shows. Also, the amount exceeds the decade's monthly median by 11.3 percent. The activity was concentrated in Midtown and Midtown South, accounting for 43.7 and 43.9 percent of the total, respectively. Additionally, leasing volumes in the two submarkets surged by about 33 percent and 42.4 percent, respectively.
Verizon commanded the top lease in July thanks to its 199,000 square foot deal at the PENN 2 building. The tech giant was followed by Latham & Watkins, which took 119,000 square feet through a new sublease at 1285 Avenue of the Americas.
Moreover, Manhattan is now set to have its best year of leasing in six years, according to Colliers.
"If demand continues at the same pace for the remainder of 2025, Manhattan’s yearly volume would exceed 40.00M SF for the first time since 2019 (42.97M SF)," the CRE firm wrote.
Speaking of demand, it has been positive over the past four years at 11.24 million square feet. However, dating back to March 2020, net absorption has been negative at 27.04 million square feet.
Another strong element is the scarce availability. The 15.2 percent rate was the lowest posted in a month since January 2021 and was down 20 basis points month-over-month. Midtown South stood out, with a 40 basis point decline.
Office rents in Manhattan were up by a modest 0.2 percent on average to $73.97 per square foot. That remains down nearly seven percent since March 2020, when prices averaged $79.47 per square foot. Downtown and Midtown South in July each experienced 0.4 percent gains in the category.
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