The Manhattan leasing market pumped the brakes last month.
Tenants inked deals for 3.1 million square feet of office space, down about 7 percent since April, according to a new Colliers report. It was the lowest monthly total since December. But leasing volume was still up 5 percent year-over-year, thanks largely to NYU’s 1.1 million square foot lease at 770 Broadway, Manhattan’s largest new lease since 2019.
“I would still say it’s a healthy month of leasing,” said Colliers’ Franklin Wallach, one of the report’s authors. “If everything were to remain the same as far as leasing for the end of the year, we would actually have the strongest year of leasing activity since 2001.”
Leasing volume was still 16 percent above the 10-year monthly average, and demand exceeded supply. Availability tightened slightly, although the average asking rent was cut by 1.2 percent — the sharpest drop in three years — to around $73.50 per square foot.
The month’s second-largest lease was law firm Fox Rothschild’s 73,000-square-foot renewal and expansion at HJ Kalikow’s 101 Park Avenue. The firm inked a 12-year lease to expand its footprint by 25,000 square feet, according to the Commercial Observer.
Financial services firm Aquarian Holdings signed a lease for 75,000 square feet at the Olayan Group’s 550 Madison Avenue in Midtown, the month’s third-largest lease deal. Aquarian will occupy the building’s three-level penthouse.
In Midtown, leasing volume shrank by 31 percent since April and 38 percent year-over-year. But availability tightened to its lowest since October 2020, a sign that supply could be hampering deals.
Meanwhile, Manhattan sublet supply shrank for the eighth consecutive month to about 14 million square feet, the lowest since July 2020. Midtown South was the first neighborhood to see its sublet supply drop to pre-pandemic levels, although overall availability is still nearly double what it was in March 2020.
Wallach said it was too soon to tell whether last month’s drop in leasing is a sign of a larger slowdown.
“The slight decrease doesn’t really say much,” Wallach said. “If every month was just like May, it would be a healthy month in terms of demand.”
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