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Manhattan Office Leasing Hit A 4-Year High in Q3

The view of Midtown from Brookfield's One Manhattan West

After a sluggish start to the year, the Manhattan office leasing market has picked up pace with more than 11M SF leased in the third quarter.

That figure represents a 20% increase over last year, according to Colliers International’s quarterly report.

Leasing volume was at a quarterly four-year high, according to the brokerage. Meanwhile, average asking rents ticked up, hitting just below $76 per SF, a new quarterly record for the borough. Rents increased in eight of the borough's 18 submarkets over the second quarter.

“This year is shaping up to be one of the strongest in recent memory in terms of Manhattan’s leasing performance, thanks to continued job growth and a healthy economy,” Colliers International Eastern Region President of Investment and Leasing David Amsterdam said in a release. “Coworking companies continue to amass significant office space as asking rents remained at a record-high while supply and absorption remained stable.”

The Midtown office market saw its best quarterly leasing figures in 18 years. There were more than six leases totaling iwith withn excess of 250K SF, including three for more than 500K SF, pushing leasing up 80% from the quarter before.

JPMorgan Chase, for example, renewed for 850K SF at 277 Park Ave., and Evercore expanded to 344K SF at 55 East 52nd St.

However, the quarterly leasing in Midtown South decreased by nearly 30% to hit 3M SF. And the Downtown market — which has been dealing with a large amount of sublease space and rising rents this year — took a major hit, with leasing activity falling by almost 45% from the year before, according to Colliers, and asking rents dipping as well.

It was the fourth quarter in a row with negative absorption, which is the longest stretch since the recession. At negative 30K SF, however, absorption was functionally flat.

Financial services, insurance and real estate companies made up 53% of the market share, Colliers found. Slightly more than a quarter of those FIRE deals were leases from coworking companies.

Coworking deals made up a third of all leases signed in August, according to a separate, earlier report from CBRE. Avison Young’s quarterly office leasing snapshot indicates 12% of leasing activity over the first three quarters of the year was from coworking tenants.