Commercial Real Estate News
After 2 Year Slump, Manhattan Office Market Enjoys Positive Absorption
Global property consultant CBRE is reporting that Manhattan's Midtown, Downtown and Midtown South markets all showed signs of a real rebound in office leasing activity in August 2021. All three markets experienced positive net absorption for the first time since July 2019, as reported in CBRE's September MarketView Snapshots.
"In August, the New York City office market had its best showing in more than a year with leasing activity by mid-size space users playing a major role," said Nicole LaRusso, senior director of research and analysis for CBRE Tri-State. "Despite the delta surge delaying plans and creating uncertainty about precisely when office workers will return to the office, the strong leasing in August shows that confidence and momentum is growing, and we expect this trend to continue through the end of the year and into 2022."
According to the CBRE report, Midtown South led the way with a second consecutive month of above average leasing activity totaling 524,000 sq. ft., up 31% from the five-year monthly average. A robust amount of small and mid-sized transactions pushed leasing activity to pre-pandemic levels. Year-to-date leasing activity was up 95% from the same period last year. Net absorption was positive 198,000 sq. ft. in August, and the average asking rent was $79.81 per sq. ft., virtually unchanged from last month. At 19%, the Midtown South availability rate fell 20 basis points (bps) from last month and was up 670 bps from a year ago.
Downtown also had its best leasing activity since pre-pandemic in August as subleases drove activity to the highest level since February 2020. Monthly leasing activity totaled 467,000 sq. ft., 22% above the five-year monthly average of 383,000 sq. ft. Year-to-date leasing activity totaled 1.62 million sq. ft. and the Downtown availability rate decreased 10 bps from last month to 20.7% with net absorption of positive 77,000 sq. ft. in August. At $58.43 per sq. ft., the average asking rent was essentially flat from last month.
The Midtown market posted positive net absorption in August for the first time since July 2019, as monthly leasing activity totaled 768,000 sq. ft. and the amount of space being returned to the market slowed significantly. Year-to-date leasing activity totaled 5.6 million sq. ft., down 20% from the same period last year. The availability rate at 18% and average asking rent at $82.73 per sq. ft. were virtually unchanged month-over-month. Sublease availability was 4.3%, with average asking rents down 10% from one year ago, to $59.86 per square foot.
