- Manhattan’s office market saw net absorption of 5.7 MSFin 3Q23, the highest level in 10 years.
- Availability fell to 17.8%, while sublet availability dropped to a 4-year low at 4.1%.
- Leasing activity surged, with 21.7 MSF leased YTD, up 31% from 2022.
- Major deals included Blackstone’s 1 MSF renewal and Christie’s 373 KSF renewal.
Manhattan’s office market is making a strong comeback, posting its highest net absorption levels in a decade, according to a report from Transwestern, as reported by GlobeSt.
By The Numbers
Net absorption surged to 5.7 MSF for 3Q23, reversing a negative 292.13 KSF from the previous quarter. Year-to-date absorption reached 2.7 MSF, a positive sign as the sector continues to recover from pandemic impacts.
The availability rate fell to 17.8%, the lowest level in two years. Notably, sublet space availability also dropped to 4.1%, marking a 4-year low, as tenants appear more confident in retaining or renewing space.
Momentum Builds
Leasing activity soared 31% YoY, totaling 21.7 MSF through September. Major renewals contributed to this surge, including Blackstone’s over 1 MSF lease renewal, Christie’s 373 KSF space, and Willkie Farr & Gallagher’s 333.45 KSF deal—all in Midtown.
Patrick Heeg, a partner at Transwestern, attributed the strong leasing activity to quicker decision-making and greater tenant openness to longer-term commitments. As companies finalize their return-to-office strategies, they are better positioned to negotiate leases.
Rents and Forecasts
Office asking rents averaged $76.55 PSF, up from $74.54 in the prior quarter. Although vacancies slightly increased YoY to 17.3%, the positive leasing and absorption trends indicate a healthier office market moving forward.
Transwestern forecasts further growth in net absorption, rents, and sales volume over the next 12 months, although they note the importance of tracking the next two quarters to confirm if this upward trend will continue into 2024.
