Optimism Abounds
Manhattan’s office market exhibits signs of recovery, characterized by increased leasing activity, a decline in availability rates, and renewed investor interest.
Leasing Activity:
- Strong Start to 2025: Year-to-date office leasing activity in Manhattan reached 5.13 million square feet by February, marking the strongest start to a year since 2014. February alone saw 2.52 million square feet leased, surpassing the five-year monthly average of 1.65 million square feet.
Availability and Absorption:
- Declining Availability Rates: The overall availability rate in Manhattan decreased to 17.8% in the fourth quarter of 2024, with fifteen out of nineteen submarkets recording reductions. Available sublease space also declined to 18.0 million square feet, the lowest level since the third quarter of 2020.
- Positive Absorption Trends: February marked the eighth consecutive month of positive net absorption, with 900,000 square feet absorbed, indicating sustained demand for office spaces.
Investor Activity:
- Renewed Interest: As employees return to offices, investors, including Blackstone and high-net-worth individuals, are showing increased interest in New York office properties, signaling potential recovery in the commercial real estate market.
- Significant Fundraising: Blackstone raised $8 billion for its latest real estate debt fund, indicating growing confidence in the sector and expectations of a market rebound.
Notable Transactions:
- Roosevelt Hotel Potential Sale: The Roosevelt Hotel in East Midtown is poised for a potential sale, with developers considering redevelopment into a 1.8 million-square-foot skyscraper. The property could fetch up to $1 billion, attracting interest from major developers.
In summary, Manhattan’s office market in early 2025 demonstrates positive momentum, with robust leasing activity, declining availability rates, and renewed investor confidence.
Armano Real Estate has experienced the miraculous year to date. This includes a record number of new assignments, successful lease restructurings, and achieving full price offers on two sublets in the first day of showing each space option. We remain optimistic regarding the 2025 and near-term Manhattan office market outlook.
Armano Real Estate encourages tenants to make their plans as the market tightens. There are huge benefits to early planning which we would be happy to discuss.
Please see our video link below and feel free to reach out to us for a complimentary lease review or space planning consultation.
