Office Rents In Manhattan Seem To Have Hit Its Trough
USA – Data from Transwestern appears to suggest that office rents in Manhattan have reached rock-bottom as the decline in rents have eased, reported GlobeSt on Tuesday evening (28 December, SGT).
Compared to Q2 2021, office rents in the area only dipped by 0.5 percent in Q3 2021 to US$70.35 psf. This is the smallest quarterly dip since the start of the COVID-19 pandemic. However, overall office rents there have fallen by 10.2 percent on an annual basis and remain 13.6 percent below their peak during the first 3 months of the year.
Still, Manhattan is among the notable office markets in CBRE’s tenant market index. In fact, it ranked 3rd among the 12 biggest US cities for office market recovery in November 2021, with multiple parameters of demand showing steady improvements.
Aside from that, the area’s office availability rate declined for the first time since mid-2019, dropping 0.2 percentage point (pp) to 18 percent in Q3 2021, based on statistics from Transwestern.
Moreover, the commercial property research provider pointed out that sublet availability contracted in all of Manhattan’s key office submarkets, while overall office availability climbed in both Midtown South and Downtown.
On the other hand, Midtown was the sole submarket to record a fall in total office availability thanks to several newly signed leases, in addition to the withdrawal of a large office building at 390 Park Avenue in preparation for its refurbishment.
“Availabilities will take time to descend from their current high level, but the uptick in market activity is a good sign. The slowdown in sublet additions will continue to be a key driver in lowering the overall availability rate,” explained Transwestern.
Furthermore, there are signs that sublet availability is also on a downtrend. After remaining steady during the 2nd quarter, the rate dropped by 0.1 pp to 4.6 percent in Q4 2021.
“The amount of sublet space relative to overall availability has decreased for a second straight quarter, and now represents 25.3 percent of all available space, the lowest since Q2 2020 and not appreciably higher than immediate pre-pandemic levels,” added the commercial property research firm.
