NYC Office Leasing Had An Impressive January
About 4.4M SF of office leases were signed in Manhattan in January alone, including 3M SF of deals in Midtown, signaling companies moving forward on pent-up demand after a sluggish 2016 mired in uncertainty.
Almost a quarter of Manhattan's leasing activity came in two deals in one building: News Corp. and 21st Century Fox's combined 1.2M SF of leases at 1211 Avenue of the Americas, expanding the firms' current space in the Ivanhoé Cambridge and Callahan-owned skyscraper in two new deals.
Most of Midtown's big wins over the past month came within three blocks of each other. Across 48th Street from News Corp.'s HQ, Endurance signed a 143k SF lease at 1221 Avenue of the Americas. Two blocks north, at 1271 Sixth Ave., the New York Times inked a deal to sublease 159k SF of Time Inc.'s space.
Elsewhere in Midtown, SS&C consolidated other offices into one of the highest-profile vacancies in the city, taking 141k SF at 4 Times Square where Condé Nast once was. Each of the four deals was in the top five biggest leases of the month, according to Newmark Grubb Knight Frank.
The momentum led to 830k SF of positive absorption for the month in Midtown, the best figure for the country's most expensive office submarket since April 2015, Colliers reports.
While leasing momentum surged, vacancy in Manhattan rose as big chunks of space, including in 3 World Trade Center — opening early 2018, according to its website — were added to the city's inventory, which grew from 442.7M SF in January 2016 to 446.5M SF a year later.
Vacancy in Manhattan rose from 11.2% in 2016 to 12.1% last month. Downtown, where 380k SF of offices came online at 199 Water St. last month, is now close to a 15% vacancy, up nearly two full percentage points over last year.
The combination of existing buildings being able to keep tenants and new blocks of offices coming online meant landlords were able to increase asking rents last month by 60 cents/SF, according to NGKF data.
Considering February started with a 400k SF renewal Downtown, Q1 is already getting off to a banner start for Manhattan's office landlords. Investment sales are not keeping pace, but if leasing velocity continues, investors could start to get more bullish on NYC.
CORRECTION, FEB. 6, 4:20 P.M. ET: A previous version of the story did not refer to the leases by 21st Century Fox and News Corp as two new, separate deals. This story has been updated.