The Manhattan office market continues to thrive in the post-pandemic world. A January report from Colliers found that the city hit 3.63 million square feet in leasing volume, representing a 24.4 percent rise from the previous month. Additionally, the number is 36 percent above the 10-year monthly average.
"The strong activity was driven by several large(100,000+-sq.-ft.) leases, led by Mayer Brown at 1221 Avenue of the Americas (331,000-sq.-ft. renewal and expansion), KnitWell Group at 7 Times Square (246,000-sq.-ft., and A&E Television Networks at 227 East 45th Street (152,000-sq.-ft. renewal)," Colliers wrote.
The Midtown South and Downtown submarkets saw the largest increases in leasing demand in the city, increasing by nearly two-fold and more than doubling, respectively. Some 41 percent of the activity happened in Midtown South. Meanwhile, Downtown saw a 20.9 percent decline year-over-year. It was a different story for Midtown, where leasing activity declined 8.7 percent versus December but rose 37.7 percent year-over-year and 39.2 percent from the 10-year monthly median.
Overall in Manhattan, availability rates continued to decline. It went to 16.2 percent in January, from 16.5 percent in December and 17.9 percent 12 months prior. According to Colliers, January saw the lowest availability rates since March 2021. The report was more mixed on sublet inventory.
"The total sublet inventory expanded by 44.4% since March 2020. But at 17.19M SF, this was the tightest supply since October 2020," Colliers wrote.
The net absorption of 1.56 million square feet marks the seventh consecutive month the category has remained in positive territory.
The one negative from January was asking rents slipping to $73.28 per square foot, down 0.2 percent from December. In addition, rents are 1.8 lower compared with January 2024 and have experienced a 7.8 percent drop since March 2020.