New York office market reports

Q3 2023

In Q3 2023, Manhattan's office availability rate decreased by 30 basis points (bps) compared to Q2, reaching an overall rate of 19.6% – comprising 15.4% for direct availability and 4.2% for sublet space. This decrease can be largely attributed to the decline in sublease space, which saw a quarter-over-quarter reduction of 1.7 million square feet (msf). Year-to-date, Manhattan has witnessed 17.8 msf of leasing activity. If this trend continues through the end of the year, Manhattan is projected to achieve approximately 23.8 msf of leasing activity in 2023, making it the slowest year for leasing activity since 2020.

Despite the decrease in leasing activity, it's worth noting that occupiers of different sizes are adopting varying approaches to the market. Among large occupiers (100,000+ sf), 32.3% have opted to relocate, while 67.7% have chosen to renew their leases. Conversely, small to mid-size occupiers (25,000 – 50,000 sf) have shown a different pattern, with 67.6% choosing to relocate, 25.0% opting for lease renewals, and 7.4% pursuing expansions.

-1.7 msf

Decline in available sublease space pushes down overall availability


From Q2 to Q3 2023, the total availability decreased by 1.7 million square feet (msf)- nearly all of which can be attributed to a decline in available sublease space. The total availability rate dropped from 19.9% in Q2 to 19.6% in Q3, comprising 15.4% direct availability and 4.2% sublet availability.

During Q3 2023, more than 2 msf of sublease space was removed from the market, which includes 1 msf of sublet leasing. Many tenants are now either choosing to reclaim their space or delaying their decision-making processes, both of which are expected to impact availability in the coming quarters.


Decrease in year-to-date leasing activity from last year


Year-to-date leasing activity for 2023 currently stands at 17.8 msf, which is 33.6% lower than the same time in 2022. Historically, average leasing activity per year through Q3 (2000 – 2019) stood at 28.8 msf; this year falls 38.2% below the average.

If this trend continues through the end of the year, leasing activity is projected to reach approximately 23.8 msf for 2023. This would make 2023 the weakest year of leasing activity since 2020 when it totaled 23.2 msf. Despite the overall decline in leasing activity, it's worth noting that most of the leases being signed are in top-tier assets, indicating a continued trend of flight to quality.


Of large occupiers are renewing while small to mid-size occupiers are relocating


In 2023, occupiers of different sizes are adopting distinct strategies in response to market conditions. Large occupiers with spaces exceeding 100,000 square feet have opted for a protective approach, with only 32.3% choosing to relocate and the majority, 67.7%, opting to renew.

On the other end of the spectrum, small to mid-size occupiers, ranging from 25,000 to 50,000 square feet, have capitalized on the tenant-friendly market, resulting in a breakdown of 67.6% relocations, 25.0% renewals, and 7.4% expansions.

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