Recovery Watch: Manhattan Office Landlords Have Best Month Since January 2020
In a piece of good news for Manhattan’s battered office market, over 3M SF of office space was leased in November — the first time since before the coronavirus pandemic the nation's largest office market eclipsed the 3M SF mark.
A total of 3.09M SF was rented last month, according to Colliers’ monthly snapshot. That was the highest monthly leasing total since January 2020, when 3.6M SF of office leases were signed just before the pandemic hit the city and brought activity to a sudden halt.
“Leasing volume has certainly picked up compared to 2020, but there’s still a significant road ahead in terms of catching back up to the pre-pandemic leasing volume,” Colliers Senior Managing Director of Research Franklin Wallach told The Real Deal.
Leaving activity increased by 14% from October, while availability, which has been at record levels for months, tightened by less than 1 percentage point to hit 16.9%. The net sublease availability in the borough also decreased from the month before, though with nearly 20M SF of sublet space available at the end of the month, the total inventory is still up more than 60% over March 2020's levels.
Rents jumped in November, too, with Manhattan’s average asking rent at $74.14 per SF, according to the brokerage. The biggest leases of the month included MSG Entertainment Group’s 428K SF lease at Penn 2, and Chubb’s 240K SF deal at 550 Madison Ave.
The city’s office market has been hit hard by the impacts of the crisis, with many companies putting major decisions on hold or considering how much office space they will need if hybrid work continues to play a role in their workplace arrangements.
Still, many tenants are starting to return to the market; nearly 60% of tenants said they are now in the market for office leases at least five years long, according to a survey from lease optimization software firm Visual Lease. Still, almost all tenants have said next year's real estate strategy is not a permanent one, and it will be reconsidered after the pandemic is over.