New York office market reports

Q2 2022

Leasing activity through the first half of 2022 reached 14.9 msf, a 25.2% increase from the first half of 2021. However, in the 10 years leading up to COVID, first-half-year leasing activity has averaged 20.2 msf, placing YTD 2022 at 26.2% below the historical average. Trophy properties, the top 10.0% of the market, continue to capture an outsized share of demand: 30.9% of leases YTD. However, new additions to the market – particularly sublet space – continue to outpace leasing activity, bringing the total availability rate up to a new peak of 18.6%.

523.3 msf

Inventory

26.4 million square feet (msf) proposed and under construction office developments, 9.4 msf of which will be delivered this year (5.1 msf pre-leased).

-1.4 msf

YTD net absorption

Manhattan reported positive absorption in Q1 2022 (+0.1 msf) but regressed in Q2 2022 (-1.5 msf), largely due to an abundance of new sublet space.

$103.30

Trophy net effective rent per square foot

When comparing June 2022 to March 2020 (pre-COVID), Trophy property net effective rents increased by 13.1% and Class A net effective rents decreased by 7.2%. Class A net effective rent decreases are due to the near-record levels of concession packages being offered to compete with Trophy properties.

18.6%

Availability rate

Total availability rate as of Q2 2022 is 18.6%, up from 18.5% in Q1 2022. Direct availability decreased by 20 basis points (bp) to 14.1% (73.6 msf) while sublease availability increased by 30bp to 4.5% (23.4 msf).

$4.8 B

Investment sales

Through the first half of 2022, office investment volume totaled $4.8B. Current quarter has seen $913.7 million in total office sales volume from 9 transactions compared to $2.0 billion from 13 transactions last quarter (excluding Google’s $1.97B purchase of 550 Washington Street).

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