NEW YORK CITY – The Manhattan office market posted 8.6 million square feet in leasing activity in the fourth quarter, a sharp rise from the third quarter, and totaled 25.8 million square feet for the year, a decline of 19% from 2022, according to research from Transwestern Real Estate Services (TRS).
The quarterly leasing figure was aided in part by the largest lease signed in the U.S. during 2023, a 765,000-square-foot relocation by law firm Paul, Weiss. Additionally, there were more than 25 leases signed exceeding 50,000 square feet, including more than a dozen exceeding 100,000 square feet. Absorption for the market closed the year strong, with back-to-back quarters of approximately 1.9 million square feet of positive absorption each.
“While 2024 will continue to test business confidence and decision making across many sectors, we are certainly seeing a shift as it relates to underlying market activity,” said Rory Murphy, Partner, Transwestern. “New York’s diverse tenant base, led largely by the financial services and legal sectors in 2023, continues to be the differentiator when compared to other markets across the country.”
Additional notable results from the report include:
- Net absorption for 2023 was 1.9 million square feet, the first positive yearly total since 2018.
- Overall availability decreased to 18.3%, its second quarter of decline.
- Sublet availability dropped below 20 million square feet for the first time since early 2022 and is at 4.2% market-wide.
- Large leases in the quarter included MetLife leasing 400,000 square feet; NYC Administration for Children’s Services signing for 538,000 square feet; and Weill Cornell Medicine leasing 296,100 square feet.
- Asking rents were down slightly from third quarter, but up 1.8% year-over-year, to close 2023 at $74.09 per square foot.
- Although new construction in Manhattan remains near its lowest levels in about a decade, there is approximately 12.6 million square feet of Class A office space proposed.
“Manhattan’s office market closed 2023 with fairly strong leasing activity, which provides notable optimism heading into 2024,” said Corrie Slewett, Transwestern Research Manager. “Having the largest office lease in the U.S. close during the quarter certainly helped but there were several large leases that contributed to the total. With absorption levels back in positive territory and availability figures on the decline, we are headed in the right direction.”
Download the Q4 2023 Manhattan office report here.
About Transwestern Real Estate Services
Part of the Transwestern companies, Transwestern Real Estate Services (TRS) strives to add value for investors, owners and occupiers across all commercial property types. Fueled by a holistic perspective of the real estate life cycle, agility and creativity are hallmarks of our approach, while vast national resources and sound market intelligence underpin customized recommendations and property solutions.
Five dynamic, integrated companies make up the Transwestern enterprise, giving us the perspective to think broadly, deeply and creatively about commercial real estate. Clients and investors rely on us for expertise that spans institutional and opportunistic investment, development, hospitality, and brokerage and asset services. Our award-winning, collaborative culture empowers team members with resources and independence to work across boundaries in pursuit of innovative solutions, reinforcing a reputation for service excellence that translates to measurable results. Through offices nationwide and alliance partners around the globe, we positively impact the built environment and our communities while fostering a work climate that champions career vitality for all. Learn more at transwestern.com and @Transwestern.
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