Commercial Real Estate News
New York City's Office Market Strengthens in September
According to CBRE's latest "Pulse of Office Demand" report, the Manhattan office market improved across all measures during the month of September 2021, pointing to a strengthening recovery. Overall, the 12 largest U.S. office markets achieved the strongest momentum in the month of September since the onset of the pandemic.
CBRE's analysis ranks Manhattan as the third-strongest city in the pandemic period recovery among the 12 major U.S. office markets, following Boston and Atlanta.
To gauge the pace of recovery, CBRE's monthly report tracks the three leading indicators of office market activity: tenants-in-the-market (TIM), which quantifies the amount of office space that companies are actively seeking; leasing activity in the form of finalized lease agreements; and the availability of sublease space.
"Manhattan made considerable strides with strong gains in demand indicators during September," said Nicole LaRusso, CBRE Senior Director of Research & Analysis. "As the summer's Covid surge fades into the distance, and vaccination rates continue to climb, we are cautiously optimistic that the improvement in office demand will build through the end of 2021 and into 2022."
For each index, a reading of 100 equates to the pre-pandemic levels of 2018 and 2019.
Manhattan's Tenants-in-the-Market (TIM) Index was 89 in September, a 10-point gain month-over-month, and six points ahead of the U.S. average of 83. The number of tenants entering the Manhattan market has been strong enough to offset conversions of much of that activity into leases, suggesting that demand is increasing.
Manhattan's Leasing Activity Index surged in September, gaining 31 points over the August level to reach 95, placing Manhattan two points above the U.S. average of 93. Manhattan saw the signing of six leases of more than 100,000 sq. ft., all of which were at least five-year commitments, and four of which were renewals, for a total of 1.4 million sq. ft. September marked the third consecutive month of improvement for Manhattan.
Manhattan saw modest improvement in the Sublease Availability Index, providing another signal of recovery, dropping one point to 190. After steadily rising since Q2 2020, the Manhattan sublease availability index has seen four consecutive monthly declines. This suggests the market may be over the peak of sublease availability. A substantial increase in sublease absorption coupled with an increasing volume of sublease space being withdrawn from the market outweighed a spike in new sublease additions in September, which is a departure from the declining volume of new sublease additions seen in the prior three months.
