Commercial Real Estate News
Manhattan Office Market Coming Back to Life in Early 2021
According to CBRE's newly released Q1 2021 MarketViews report for Midtown Manhattan, Downtown and Midtown South, there was increased office leasing activity in all three markets quarter-over-quarter. Quarterly leasing activity in Manhattan totaled 2.89 million sq. ft. in Q1, 67% greater than in Q4 2020 but 54% below the five-year quarterly average of 6.26 million sq. ft.
Renewals totaled nearly half of leasing activity in the quarter at 1.36 million sq. ft., with leasing velocity totaling 4.25 million sq. ft. in Q1, down 48% from the same period last year. The availability rate rose 180 basis points (bps) quarter-over-quarter to 17.2% and was up 550 bps year-over-year.
At $75.99 per sq. ft., the average asking rent was down 2% from the previous quarter and 7% year-over-year. Sublease availability was 4.7%, with average asking rents down 9% from one year ago to $59.15 per sq. ft.
"The commercial real estate market appears to be turning a corner as companies begin formulating strategies for returning employees to the workplace," said Nicole LaRusso, Director of Research & Analysis for CBRE Tri-State. "With a 22% increase in tenants in the market from six months ago, this positive sign suggests that Manhattan could see an uptick in leasing activity in the later months of 2021."
In Midtown, quarterly leasing activity totaled 1.92 million sq. ft., up 34% from Q4 2020 but 51% below the five-year quarterly average. Renewals totaled 1.19 million sq. ft. in Q1, with leasing velocity of 3.10 million sq. ft. in Q1, down 42% from the same period last year. At $82.01 per sq. ft., the average asking rent was essentially flat quarter-over-quarter but was down 5% year-over-year.
Quarterly leasing activity in Midtown South totaled 519,000 sq. ft., its highest total since the pandemic began and up 159% from Q4 2020, but still down 56% from the five-year quarterly average of 1.18 million sq. ft. Renewals totaled 97,000 sq. ft. in Q1 2021, with leasing velocity of 616,000 sq. ft., down 43% from the same period last year. The average asking rent was $77.16 per sq. ft., down 3% from last quarter and 11% from one year ago.
Downtown, leasing activity totaled 449,000 sq. ft. in Q1, up 347% from Q4 2020 but 62% below the five-year quarterly average of 1.17 million sq. ft. Renewal activity totaled 78,000 sq. ft. in and leasing velocity totaled 527,000 sq. ft. in Q1, down 70% from the same period last year. At $58.89 per sq. ft., the average asking rent was down 4% from the prior quarter and 7% from one year ago.
