Manhattan CRE Leasing Activity Declines by 18% QoQ

In the third quarter of 2023, leasing activity for commercial real estate in Manhattan amounted to 4.2 million square feet, showing a decline of 18% from the second quarter of 2023 and a significant drop of 44.8% from the third quarter of 2022.

What happened in Manhattan: 

• Leasing activity decreased by 18% from Q2 2023 and 44.8% from Q3 2022.

• Overall vacancy rate slightly dropped to 16.5%, the first reduction since Q4 2021.

• Class A vacancy decreased, while Class B vacancy increased.

• Sublease vacancy saw a consecutive decline for the second quarter, reaching 4.1%.

• Direct asking rents experienced a slight dip, settling at $81.55 per square foot.

• Financial services sector dominated the leasing volume, particularly law firms, accounting for 26.3% of the leasing volume.

• Upcoming developments are anticipated to significantly narrow down, with the lowest amount of square feet under development in seven years: 12.3 million square feet.

What this means: The Manhattan office market is facing some challenges, with leasing activity and asking rents declining. However, there are some positive signs, such as the drop in overall vacancy and the strong demand for high-quality spaces. The future of the NYC’s central borough office market depends on a number of factors, including the overall economic climate, the continued adoption of remote work, and the availability of new office space. The data was compiled from JLL’s Q3 2023 Manhattan office report.