Mixed Quarterly Results Balanced by Signs of Optimism for Second Half of Year
July 18, 2022
NEW YORK – The Manhattan office market posted 6.4 million square feet of leasing activity, as well as an increase in asking rent rates, in Q2 2022, reflecting confidence from both tenants and landlords, according to the latest research from Transwestern Real Estate Services.
The leasing total was supported by nearly 20 transactions exceeding 50,000 square feet, many with terms of 10 or more years. Manhattan average asking rent increased to $72.03 per square foot, snapping a streak of eight consecutive quarters of decline. Net absorption was positive for Class A assets, though negative 86,000 square feet overall due to growing availabilities in Class B properties.
“Manhattan has seen strong improvement in leasing activity for the first half of the year compared to 2021, and this is especially true in Class A trophy assets,” said Patrick Heeg, Partner, Transwestern. “The increase in employees returning to office has resulted in companies having more long-term confidence in their real estate strategies.”
Additional highlights from the report include:
- Leasing activity for the first half of 2022 totaled 13.4 million square feet, a 30% increase from 10.3 million square feet in the first half of 2021.
- Net absorption of negative 86,000 square feet is much improved from Q1’s negative 2.1 million square feet.
- Class A absorption was positive for the first time since 2019.
- Availability remained steady at Q1’s peak of 18.5%.
- Average asking rent of $72.03 per square foot is up 1.9% year over year, though still 11.6% below the Q1 2020 peak.
- Rent increase was driven in good measure by high-priced availabilities at several new buildings.
“The market is likely to see further stabilization and incremental growth, rather than a sudden upturn that matches the downturn at the beginning of the pandemic,” said Corrie Slewett, Research Manager at Transwestern. “Notably, the increase in asking rents after two years of decline is a good sign, as is office occupancy tracking data – from commuting figures to building entry card swipes – which continue to show more employees returning to the office.”
Download the Q1 2022 Manhattan office report at https://transwestern.com/market-reports.
About Transwestern Real Estate Services
Transwestern Real Estate Services (TRS) adds value for investors, owners and occupiers of all commercial property types through a comprehensive perspective and by providing solutions grounded in sound market intelligence. Part of the Transwestern companies, the firm applies a consultative approach to Agency Leasing, Asset Services, Tenant Advisory + Workplace Solutions, Capital Markets, and Research & Investment Analytics.
The privately held Transwestern companies have been delivering a higher level of personalized service and innovative real estate solutions since 1978. Through an integrated, customized approach that begins with good ideas, the firm drives value for clients across commercial real estate services, development, investment management, and opportunistic programs for high-net-worth investors. Operating from 33 U.S. offices, Transwestern extends its platform capabilities globally through strategic alliance partners whose unique geographic, cultural, and business expertise fuels creative solutions. Learn more at transwestern.com and @Transwestern.