According to CBRE's Q1 2022 figures for Manhattan's Midtown, Downtown and Midtown South office markets which saw leasing activity climb by nearly 100% year-over-year.
Manhattan overall saw 5.68 million sq. ft. of leasing activity, up 96% from Q1 2021. Leasing was slow in January and February due to the Omicron surge, but tenants returned to the market in force in March, helping to drive a strong finish to the quarter and creating optimism about the market regaining momentum in Q2.
Financial services and the tech sector continue to drive activity. Signature Bank (169,000 sq. ft. at 1400 Broadway) and PDT Partners (110,000 sq. ft. at 60 Columbus Circle) were the two top financial service tenant transactions, while IBM Corporation (328,000 sq. ft. at 1 Madison Avenue), Chainalysis (78,000 sq. ft. at 114 Fifth Avenue) and Celonis (75,000 sq. ft. at 1 World Trade Center) were the top transactions from the tech sector.
"High-quality new construction and renovated buildings continue to see the most interest from tenants, and we expect the flight to quality trend to pick up as leasing momentum builds this year," commented Nicole LaRusso, Senior Director of Research and Analysis, U.S. North Region.
Driven by the financial services sector, Midtown experienced 3.38 million sq. ft. of leasing in Q1 2022, the second highest total since Q1 2020 and 76% higher than the same time last year. Despite the strong quarterly leasing activity, a number of large space availabilities entered the market, causing negative net absorption of 2.51 million sq. ft. and driving the availability rate to 18.6%, a new high. Midtown's average asking rent was 2% higher from the previous quarter to end Q1 at $84.76 per sq. ft.
At 1.41 million sq. ft., the Midtown South market posted a third consecutive quarter of above-average leasing in Q1 2022 and saw its average rent climb by 2% from the previous quarter and 4% year-over-year to $80.09 per sq. ft. Similar to Midtown, net absorption in Midtown South was negative 927,000 sq. ft. in Q1 2022 despite strong leasing due to a number of new space additions to the market. As a result, the availability rate rose to 19.1%, though it remains below the all-time high of 19.4% set in mid-2021.
According to the CBRE report, Downtown is on the road to recovery. The market posted 884,000 sq. ft. in leasing activity during Q1, the second-highest total since Q1 2020 and 97% greater than the same time last year. As a result, Downtown had its first quarter of positive absorption since 2019 at 192,000 sq. ft. Consequently, the market's availability rate dropped 30 basis points to close Q1 at 22.2%. The overall asking average rent was $58.84 per sq. ft., a 1% quarterly decline.