Big May For Manhattan's Office Market Could Create 'Artificial Feeling' Of Good News

There are almost 8M SF of large blocks of office space that will be available in Manhattan in 2019.

There are almost 8M SF of large blocks of office space that will be available in Manhattan in 2019.

“Although the high-profile leases are making headlines, they are generally for 20% to 30% less space than what the tenant had previously occupied,” Savills Studley Vice Chairman Jeffrey Peck said. “When coworking companies are the most active tenants in the marketplace, it gives landlords a false sense of security.”

In May, a total of 4.2M SF was leased in Manhattan, according to Colliers International, an 82% year-over-year increase, with the second quarter having already surpassed Q1 in terms of the number of square feet leased.

The average asking rent was at $74.04 in Manhattan, a slight increase over the previous year.

“[In] Manhattan overall, absorption was positive for the first time since September 2017,” Colliers International Managing Director of Research Franklin Wallach said, adding that the Downtown and Midtown markets both saw positive absorption for the first time this year.

“In May, you had two leases for more than a quarter of million square feet … A few megadeals can have a dramatic impact,” Wallach said, although he noted most of Manhattan’s office leases are in the 5K to 15K SF range.