Lappin: “Lower Manhattan was making headlines on a weekly basis last year; that will continue through early 2017.”
NEW YORK CITY—Last year brought Lower Manhattan a surge of retail activity and several residential and hotel openings south of Chambers Street, according to the Alliance for Downtown New York’s newly released 2016 Year in Review. The report also reflects how—following several years of strong leasing activity—Lower Manhattan’s office market finally caught its breath in 2016 as part of the city-wide cool down.
“We just witnessed a milestone year for retail in Lower Manhattan, bringing one of the last key elements together in our transformation to a live, work and play neighborhood,” says Downtown Alliance president Jessica Lappin. “From restaurant and retail openings, to hotel and housing growth, to the city’s largest office lease deal of the year, Lower Manhattan was making headlines on a weekly basis. That momentum will continue through the early part of 2017 as we already see a number of major deals on the horizon.”
Non-office commercial activity strengthened Lower Manhattan’s continued transformation from a nine-to-five hub of employment to an active neighborhood with the opening of more than 200 new stores and restaurants, six residential properties and seven hotels. The neighborhood’s totals grew to 658 stores, 512 eateries, 323 residential and mixed-use buildings and 30 hotels.
Commercial office leasing in Lower Manhattan was largely driven by current tenants who renewed, expanded, or moved within the neighborhood in 2016. This trend underscores the sentiment that those who are most familiar with the area are satisfied and are being enticed to stay and benefit from the ongoing improvements.
Despite a decline in new leasing activity, 2016 renewal activity was 3.6 times higher than 2015 and included the city’s largest deal with McGraw -Hill Financial recommitting to its 900,000 square foot space at 55 Water St.
The renewal trend was particularly strong among the district’s FIRE and government tenants, though the former group of sectors have reduced their footprint in the neighborhood. FIRE occupancy has dropped nearly 20% in the last eight years going from 55% to 37%.
Overall, Lower Manhattan’s commercial leasing vacancy rates held stable around 10% since the fourth quarter of 2015, and asking rents remained at historic highs of $59 per square foot.