8.2.22 - Leases for Midtown office space more than double in July
' Among a citywide surge in demand for office space in Manhattan, leases in Midtown more than doubled in July, according to a recent report from Colliers.
The neighborhood saw more than 1.9 million square feet of office space snatched up last month, up from just 980,457 in June. Four of the five largest leases in Manhattan were in Midtown, including offices for software company Datadog, which grabbed the largest deal at 330,000 square feet, as well as jobs giant Indeed and radio conglomerate Katz Media Group. It was the busiest month of leasing since December 2018 and more than triple the volume of July 2021.
The growth came as leasing activity for office space surged almost 43% across Manhattan, to over 3.1 million square feet, the strongest total since January 2020.
Although that total volume remains 11.6% below the prepandemic average, the growth is significant given the continued proliferation of remote work. A survey by the Partnership for New York City in May found that 78% of employers expect a permanent shift to a hybrid office model, and only 8% of Manhattan office workers go in five days a week. But Franklin Wallach, an executive managing director at Colliers, said companies are still continuing to lease.
“We are certainly catching up,” he said. “Activity is moving in the direction of getting back to prepandemic levels.”
Overall, the average asking rent fell by 0.2%, to $75.43 per square foot. That’s still below the prepandemic average of $79.47 in March 2020 but a notch above the low of $72.68 in August 2021. Prices fell despite a rise in demand because a number of high-priced office spaces went off the market, such as at 50 Hudson Yards, bringing down the average.
The recent appeal of office space in Midtown, defined by Colliers as spanning between 59th Street and 40th Street, is bucking the longer-established trend, Wallach said. Beginning with Condé Nast’s move downtown in 2011, the city’s leading firms have been opting for sites in Lower Manhattan or Hudson Yards.
“Before the pandemic, Midtown was very much a market with its back to the wall,” he said.
It’s seen a resurgence since then, with companies including Roku and Salesforce both leasing offices between Bryant Park and Times Square. The neighborhood has seen heightened demand consecutively for the past five months, and its availability has tightened by 3.5 million square feet since peaking in July 2021. The average asking rent in the neighborhood rose 0.3% last month, to $79.86. '