The Manhattan workplace market confirmed its first crack in two years in February as leasing slowed and availability ticked up.
Tenants inked offers for about 2.2 million sq. toes, a 39.5 p.c drop from January and an almost 30 p.c year-over-year slide, in accordance with a brand new Colliers report. However rents continued to climb for the ninth consecutive month to a median of $77.22 per sq. foot, the very best degree since August 2020.
After a surge of leasing exercise, demand dipped 19 p.c beneath the 10-year month-to-month common of two.76 million sq. toes. Not like January, which noticed six leases north of 100,000 sq. toes, February noticed simply two six-figure offers — Fanatics’ 213,000-square-foot extension and expansion at Meadow Companions’ 95 Morton Road and legislation agency Latham & Watkins’ 131,000-square-foot expansion at RXR’s 1285 Sixth Avenue.
The provision price rose barely (simply 0.1 proportion factors) to 13.6 p.c, with 200,000 sq. toes of adverse absorption. Nonetheless, general provide has shrunk dramatically from pandemic highs, from a February 2024 peak of about 98 million sq. toes to about 72 million sq. toes, per Colliers.
Sublet house additionally inched up for the primary time since September 2024, climbing by 510,000 sq. toes to 11.16 million sq. toes. Even so, sublet provide stays 6.2 p.c beneath its March 2020 whole and is down greater than 28 p.c 12 months over 12 months.
There have been brilliant spots. Availability held regular in Midtown South and Downtown, and all three submarkets posted lease positive aspects. Rents climbed in Midtown, Midtown South and Downtown.
For now, February’s dip seems extra like a pause than a reversal.
“There have been nonetheless silver linings in February that illustrated Manhattan’s continued restoration,” stated Franklin Wallach, govt managing director of analysis & enterprise growth for Colliers in New York.
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