New York office market reports
Q1 2024
To kick off 2024, Manhattan concluded Q1 with 6.1 million square feet (msf) of leasing activity – a slight decrease of 3.4% compared to Q1 2023. The total availability rate surged by 50 basis points (bps) from the previous quarter to 19.7%. This overall availability increase was primarily attributed to a rise in directly available space, climbing by 2.4% from 78.6 msf to 80.5 msf.
Nevertheless, the deals being signed paint a positive picture for the future of the Manhattan office market, particularly in class A space. The average length of class A lease terms has risen by 14.9% from Q1 2023 to Q1 2024, expanding from 97 months to 112 months. Additionally, 66.6% of overall leasing consisted of new leases or relocations.
of Manhattan leasing activity in Q1 2024 falls below Q1 last year
Leasing activity for Q1 2024 in Manhattan reached 6.0 million square feet (msf), marking a decrease of 40.5% compared to the pre-COVID Q1 average from 2000 to 2019. This figure also reflects a 3.4% decrease from 2023 and a 27.6% drop compared to 2022. Despite slightly exceeding last quarter’s amount of 100,000+ square feet leases, this marks the lowest level of first-quarter leasing activity since 2021.
On the other hand, 66.6% of overall leasing in Q1 comprised either new leases or relocations, signaling a promising start to the year after renewal activity dominated in 2023.
Manhattan availability rate jumps 50 basis points to start the year
The overall availability rate in Manhattan has seen a significant spike at the beginning of 2024. By year-end 2023, the overall availability rate was at 19.2%, a figure that rose by 50 basis points in just one quarter.
This increase in overall availability was primarily attributed to direct available space, which rose by 2.4% from 78.6 msf to 80.5 msf – the highest level since Q1 2022. This quarter also witnessed the introduction of 13 blocks of 100,000+ square feet to the market. Additionally, sublet available space increased by 1.3% from 20.8 msf to 21.0 msf.
increase in Class A length of lease terms, Q1 2024 vs. Q1 2023
Over the past 12 months, there has been a convergence in the average length of Trophy and Class A lease terms. From Q1 2023 to Q1 2024, the length of Trophy lease terms decreased by 13.0%, going from 128 months to 111 months, whereas the length of Class A lease terms increased by 14.9%, rising from 97 months to 112 months.
The increase in Class A lease term lengths can be largely attributed to landlords offering record-level concession packages, enticing occupiers to sign longer-term leases.
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