- Manhattan’s office vacancy rate dropped to 16.8% as of September, outperforming the national average of 19.5%.
- Investment activity surged with $2.7B in YTD sales, leading all U.S. markets in total volume and average PSF prices.
- Office-to-residential conversions are gaining momentum, with Manhattan identified as the top U.S. market for such projects.
According to CommercialSearch, Manhattan’s office sector is finding its footing despite ongoing challenges. Vacancy rates are improving slightly, and investment activity is outpacing other markets.
Significant completions, office-to-residential conversions, and major leases also highlight the Big Apple’s resilience, no matter what seems to be happening in the nation (or world) at large.
Big Apple in Focus
While only one office project broke ground through September 2024, developers delivered five properties totaling 3.1 MSF, including JPMorgan Chase’s 270 Park Avenue, a 2.5 MSF Class A+ tower set to open in 2025.
The big city also leads the nation in office-to-residential conversions, with 53.1% of office stock in Tier I and II categories for conversion potential, according to CommercialEdge.
Notable projects include Silverstein Properties’ 55 Broad conversion, which added 571 luxury rental units, and Vanbarton Group’s planned conversion of 1011 First Ave.
By The Numbers
Manhattan outpaced all other U.S. markets in investment activity, with $2.7B in YTD sales—more than double the volume seen in 2023. The average sale price reached $379 PSF, far exceeding the national average of $167 PSF.
Major transactions in the period included Bloomberg Philanthropies’ $560M acquisition of 980 Madison Ave. and JPMorgan Asset Management’s $320.2M purchase of 250 Park Ave.
Meanwhile, office vacancy rates declined 90 bps YoY to 16.8%, outperforming peers like Washington, D.C. (17.7%) and the Bay Area (25.3%). Overall, Manhattan maintained its status as the priciest market for office leasing, with average asking rents of $67.93 PSF.
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Leasing Activity
The coworking sector is also thriving, with 11.2 MSF of flex office space making Manhattan the largest market in the country. Major players include hanger-on WeWork (2.4 MSF) and competitor Industrious, which recently expanded at 860 Broadway.
Significant lease renewals included Christie’s 25-year deal at Rockefeller Center, where the auction house will occupy 400 KSF, and Bloomberg LP’s 11-year extension at 731 Lexington Ave., maintaining its full-building occupancy.
Looking Ahead
While challenges remain, Manhattan’s office sector shows promising signs of recovery. Improvements in vacancy rates, robust investment activity, and growing office-to-residential conversions signal the market’s adaptability and resilience.
With key developments in the pipeline, NYC is well-positioned to remain a leader in the U.S. office market.
