Manhattan Office Leasing Volume Plunges 43% In Q4 2022
USA – Data from Colliers show that office rental volume in Manhattan sharply declined by 43 percent year-on-year during the 4th quarter. During the period, office tenants leased only 4.9 million sq ft of office space, the lowest quarterly figure since Q2 2021, reported The Real Deal on Friday morning (6 January, SGT).
Compared to the preceding quarter, office leasing volume in the borough plummeted by 47 percent, the highest quarter-on-quarter decline since the onset of the COVID-19 pandemic.
The fall in office space demand was consistent across Manhattan’s 3 main office districts – Downtown, Midtown South, and Midtown.
In Downtown, office rental volume plummeted to merely 638,000 sq ft, which works out to a drop of 36 percent year-on-year and 51 percent quarter-on-quarter. Still, the office submarket recorded positive office net absorption for the 1st time in 2 years at more than 140,000 sq ft during the period under review.
As for Midtown South, it registered its weakest quarterly leasing volume since the beginning of the coronavirus outbreak, with the figure hitting only 1.9 million sq ft. This translates to a fall of 33 percent year-on-year and 44 percent quarter-on-quarter. While the office submarket saw a negative net absorption of 2.5 million sq ft, it was the highest in nearly 2 years.
Meanwhile, Midtown recorded 2.4 million sq ft of office rental volume in Q4 2022, its lowest quarterly figure since Q2 2021. Office leasing volume in the submarket had plunged 47 percent quarter-on-quarter and over 50 percent year-on-year. Also, office net absorption there fell to -393,000 sq ft versus 2.6 million sq ft in the corresponding period in 2021.
Adding the -2.8 million sq ft seen in Q4 2022, the cumulative net office absorption in Manhattan since the beginning of the coronavirus outbreak has reached – 37.6 million sq ft.
Data from Colliers also revealed that the borough’s available office space surged by nearly 70 percent since the start of the COVID pandemic to 91.4 million sq ft. Also, Manhattan’s office availability rate rose for the first time in a year, edging up by 0.5 percentage point from Q3 2022, albeit it’s still down 0.4 percentage point from the end of 2021.
In particular, the office availability rate in Midtown and Midtown South respectively climbed by 0.2 and 1.3 percentage points in Q4 2022 compared to the prior quarter. As for Downtown, its office availability rate fell for the 1st time since before the virus outbreak and the rate dropped on an annual basis in the last quarter of 2022.
Furthermore, office property investment in Manhattan plummeted by 85 percent year-on-year to about US$1 billion in Q4 2022 – the biggest annual fall in 5 years. The median office price dropped to US$725 psf in the 4th quarter compared to US$874 in the same period in 2021.
