Manhattan office leasing rebounded after a slow first quarter. Leasing for the first half of 2024 increased 8.9% from the first half of 2023.
The overall availability rate decreased by 10 basis points from a quarter ago to 20.0%. The decline was due to greater demand and activity in high quality space. Class A availability fell by 40 basis points. However, Class B and C availability increased 30 basis points.
Average asking rents in Manhattan increased by 0.5% from last quarter to $76.63 per square foot. However, rent movement varied by asset class. Class A rents increased 2.6% while Class B and C fell by 3.3%.
Manhattan’s office attendance has shown some fluctuations but remains steady and has not dramatically changed from the figures seen in September 2023. As of April 2024, office attendance in Manhattan was at 75% of its 2019 levels, indicating a slight increase from March’s 74%.
Thus, overall office occupancy still faces challenges. The real estate market is dealing with high interest rates and reduced demand as companies continue to downsize and consolidate their office spaces. Moreover, the trend toward mid-week office attendance is becoming more pronounced, with employees preferring to work from home on Mondays and Fridays.
In summary, the Manhattan Office market experienced a rebound in the second quarter of 2024. However, this was due to strength in the higher quality part of the market and continued stagnation in office attendance may continue to be a drag on a complete rebound.
Tenants have a unique window of opportunity to take advantage of existing conditions now. So, our advice is to seize the market opportunity.
It is increasingly important to have a trusted and unconflicted advisor to help navigate the market and create substantial economic value. Please feel free to reach out to us regarding a no-fee lease review or hybrid space consultation. We can provide the planning and resources necessary to achieve your corporate real estate goal and vision.
