Manhattan Office Leasing Swelled In July

Manhattan’s office market is heating up again.

Tenants inked deals for 3 million square feet in July, up almost 11 percent from June, according to a new Colliers report. Telecom titan Verizon inked the month’s largest lease, a 199,000-square-foot deal at Vornado’s Penn 2. Law firm Latham & Watkins grabbed the second-largest, 119,000 square feet at RXR’s 1285 Sixth Avenue.

All in all, the borough is on track for 40 million square feet of leasing activity by year’s end — a level not seen since the pre-pandemic heyday of 2019, according to Colliers. Overall, Manhattan’s availability shrank to 15.2 percent, the lowest since January 2021. Sublet supply continued its downward trend, hitting its leanest level in five years.

But it’s not all champagne and confetti. Despite the recent uptick, demand was down 22 percent year-over-year. That’s largely due to Blackstone’s 1 million square foot extension and expansion at 345 Park Avenue last July, which accounted for 25 percent of that month’s demand.

But while some neighborhoods are sizzling, others — like Downtown — are still playing catch-up.

“The sheer amount of positive absorption we’ve seen in the market over the last four years really is telling as far as to what degree the market and the supply is really beginning to recover,” said Franklin Wallach, one of the report’s authors. “Some areas of Manhattan are much closer to it than others.”

Midtown roared back last month with 1.3 million square feet of leasing activity, up by a third from June. The availability rate dropped below 14 percent, the tightest it’s been since 2020. The average asking rents basically stayed the same at $79 per square foot.

Midtown South was a surprise winner, tying with Midtown in leasing volume. Demand was driven by Verizon’s anchor lease and Sigma Computing’s 64,000-square-foot deal at SL Green’s 1 Madison Avenue. Asking rents climbed slightly to almost $78 per square foot. But Midtown South still has the biggest increase in supply compared to March 2020, with 29 million square feet left to fill.

Downtown continued to lag, locking in just 375,000 square feet, down by half from June. But it still fared better than the 183,000 square feet from a year earlier.