Manhattan Absorbs More Office Space in Q2

Manhattan Absorbs More Office Space in Q2

Commercial News » New York City Edition | By Michael Gerrity | July 12, 2022 9:04 AM ET

Based on new data from global property consultant CBRE, Manhattan's Midtown, Downtown and Midtown South office markets in Q2, 2022 saw overall positive absorption knock availability down 30 basis points (bps) to 19.2%.

Manhattan overall recorded 5.94 million sq. ft. of leasing activity during Q2, 5% higher than the previous quarter, but 4% below the five-year quarterly average. Year-to-date leasing of 11.62 million sq. ft. is up 83% from the same time last year and 3% above the five-year year-to-date average. Net absorption was positive 976,000 sq. ft. in Q2 2022.

"The flight-to-quality trend played a leading role in leasing activity, particularly in Midtown, as several tenants committed to the newest, best-in-class office space with amenities that appeal to their employees," commented Nicole LaRusso, Senior Director of Research and Analysis, U.S. North Region.

Midtown saw 4.24 million sq. ft. of leasing in Q2 2022, a 25% increase from the previous quarter and 11% above the five-year average. Importantly, year-to-date leasing of 7.62 million sq. ft. is 90% above the figure recorded at the same time last year and a clear indication of Midtown's rebound. Net absorption was positive 1.15 million sq. ft. during Q2, while the availability rate dropped 50 bps over the previous quarter to 18.1%, but 30 bps above the same period last year.

While quarterly leasing in Midtown South of 1.1 million sq. ft. was 22% less than the previous quarter and 13% behind the five-year average, year-to-date leasing activity totaling 2.5 million sq. ft. is up 92% from the same time last year. Like Midtown, net absorption in Midtown South was on the positive side for the quarter, at 195,000 sq. ft. At 18.9%, the availability rate decreased 20 bps from last quarter and was down 50 bps from one year ago.

According to CBRE, leasing slowed in the Downtown market during Q2. Reflecting this, Q2 leasing activity of 606,000 sq. ft. is 32% lower than the previous quarter and 44% below the market's five-year quarterly average. However, year-to-date leasing of 1.49 million sq. ft. is 43% higher than the same time in 2021. As a result of tepid leasing, Downtown posted negative net absorption of 365,000 sq. ft. in Q2. The availability rate increased to 22.6%, up 40 bps from the previous quarter and up 250 bps from the prior year.

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