New York City’s thriving office market continues to laugh off claims of “distress” — achieving leasing volume not seen in years.
Vacancy is down to 14.8% — the lowest level in five years — according to JLL’s latest “monthly market snapshot.” The rate is just 7.6% in trophy buildings, close to an all-time low.
Third-quarter leasing hit 6 million square feet, bringing year-to-year leasing to 21.7 million square feet — a year-over-year hike of 7% — JLL found.
Meanwhile, average direct-lease rents in Midtown jumped 2% in the third quarter, to $85.44 per square foot. The increase at trophy locations was even greater — 3.1%, to $132.24 per square foot.
A different brokerage, CBRE, found “a similar sentiment but slightly different measures,” a spokesman said, with availability and vacancy at the lowest levels since 2021.
CBRE said that sublease availability — which was a drag on the market after the pandemic struck in 2020 — fell by nearly half since 2023. Today’s sublease supply of 12 million square feet is only 1.5 million more than it was at year-end in 2019.
Some sublease space was absorbed, as in Bank of New York’s expansion into former Condé Nast floors at One World Trade Center. In other cases, tenants changed their minds about shedding as much space as they’d originally planned.
Certain industry analysts and media pundits stubbornly assert that Manhattan offices remain half empty due to work-from-home policies, claiming that institutional investors and large lenders remain leery.
Their claims are belied by recent huge leases for Deloitte at 70 Hudson Yards, NYU at 770 Broadway and Amazon at 10 Bryant Park, along with Guggenheim’s renewal and expansion at 330 Madison Ave.
“These are not short bets, but long-term commitments that underscore confidence in Manhattan’s role as a global business center,” said JLL Vice Chairman Joe Messina.
“While not all space will be filled five days a week, these large transactions show that major firms want high-end space to bring people together and sustain operations at scale,” he added.
The investment-sale market, which was stagnant after the pandemic, sprang back to life in August with the $1.08 billion sale of 590 Madison Ave.
Confidence is also reflected in the Vornado-Rudin-Ken Griffin plan for a new skyscraper at 350 Park Ave. and BXP’s decision to build a tower at 343 Madison Ave. before tenants are signed.
As for the supposed work-from-home trend, research platform Placer.ai found more employees in Manhattan offices in July of this year than in the same month in 2019.
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