It turns out that Manhattan's office market isn't immune to slowdowns in the post-pandemic world. The latest report from Colliers finds that leasing volume was about 3.18 million square feet in February, a 12.5% plunge from the previous month.
The declines were led by the performance in Midtown South, where leasing activity plummeted by 60 percent to 571,333 square feet. Also, these levels are down 38 percent from the submarket's 10-year monthly average and by a third from 12 months ago.
"Unlike January’s demand, which included three separate 100,000+-sq.-ft. transactions, the largest lease to close in February was Netflix’s 33,000-sq.-ft. expansion at 888 Broadway," Colliers wrote in regards to the performance of Midtown South last month.
The Midtown submarket saw a monthly decline of more than a quarter of a percentage in leasing while experiencing 12 percent year-over-year growth. Downtown, meanwhile, saw its leasing quadruple to 1.25 million square feet. That's the highest monthly volume the submarket recorded since December 2019.
But leasing still looks pretty healthy in Manhattan despite the dip in February. Overall, the category is up 18.6 percent from the 10-year monthly average and 38.3 percent year-over-year in the entire city.
The top three largest deals included Jane Street Group's 983,791 square foot lease of 250 Vesey Street, iCapital taking 219,928 square feet at 60 East 42nd Street, and Mizuho Financial Group's 151,409 square feet at 1285 Avenue of the Americas.
Outside of leasing, Manhattan's office sector is seeing plenty of other good signs. Net absorption remained positive for the eight straight month, at 900,000 square feet in February. That comes as -32.85 million square feet has been negatively absorbed since March of 2020 due to the remote work caused by the pandemic.
Also, the overall availability rate is at its lowest level since March 2021, at 16.1 percent. Total available space in the market is 86.70 million square feet. Particularly, the sublet category dropped for the fifth straight month and is now at 1.63 million square feet.
And while rents inched up by 0.7 percent from January to $73.82 per square foot, they are down 0.9 percent year-over-year and 7.1 percent since March 2020.