Manhattan's office market continues to pick up speed, but new leases are still not keeping pace with vacant space hitting the market.

Manhattan’s office availability rate hit 17.4% last month, a new record, according to Colliers data. Since the pandemic began in March 2020, overall availability has increased by 74.1% and now sits at nearly 94M SF.

Leasing volume is inching upward, but it still pales in comparison to pre-pandemic rates. Some 2.3M SF worth of Manhattan leases were signed last month. That marks a more than 2% increase from January and represents a higher level than February in both 2021 and 2020. However, that figure is nearly 35% down on the average in 2019, according to Colliers.

“Although leasing activity has increased beyond the 2020 and 2021 levels, the Manhattan market is still at a point of supply outpacing demand. Sublet inventory continues to be a factor along with millions of square feet of new construction/major renovations and vacant direct space,”  Colliers Executive Managing Director Franklin Wallach wrote in an email.

“A true recovery won’t be felt until demand reaches an inflection point that leads to the absorption of the roughly 40M square feet of space added to the available inventory over the last two years”.

Sublet availability jumped by 1.2M SF,  the most significant monthly increase since March last year. Average asking per square foot in Manhattan was sitting just below $75 per SF in February, which is up 3% from its pandemic nadir but still 6% lower than the average in March 2020.

Meredith Corp. listed its 323K SF at 225 Liberty St., Crain's New York Business reports, and 130K SF was listed at 25 Broadway. Beyond new sublease listings, the financial firms that have long defined the city's office market are continuing to pull back on space.

Wells Fargo slashed its New York City footprint by 15%, or 600K SF, last year, Crain's reports, while Voya Financial consolidated by 13% and Bank of New York Mellon shaved 10% of office space in its namesake city. JPMorgan Chase's footprint in New York shrank by 400K SF, or 4%.

The five biggest leases of February were signed for Midtown properties, and availability remained unchanged. Mutual of America's 252K SF lease at 320 Park Ave. was the month's largest, followed by AlphaSights’ 236K SF lease at 100 Park Ave.

Midtown South saw leasing almost triple from a year ago, with deals like The Bentex Group’s expansion at 34 West 33rd St. and Estée Lauder renewing and expanding at 575 Broadway.

Leasing activity Downtown dropped by 57% from a month earlier, however, and availability is now at almost 20%, which is a record for the area.

The city’s return to office has been slow, though there are indications that the tide may be turning. Kastle Systems shows that office occupancy in the city was back above 30% last week, and many large companies plan to execute on their return-to-office plans starting this month.

But how much the office market has been altered by the pandemic remains to be seen. A requirement for full-time office presence is not yet widespread — and there is an expectation that people will want flexibility with their office requirements. The city is still facing a significant flood of supply, with about 25M SF of office construction and major renovations that are expected to deliver between 2022 and 2024.