- Manhattan office leasing dropped 39.5% month-over-month and 29.7% year-over-year in February.
- Only two 100 KSF-plus office leases were signed in February versus six in January.
- Midtown South and Downtown saw the steepest declines in leasing activity.
- Despite weak demand, average asking office rents in Manhattan rose for the ninth straight month.
Leasing Activity Slows Sharply
Globe St reports that Manhattan’s office leasing market saw a notable downturn in February, with just 2.23M SF leased—down nearly 40% from January. According to Colliers, the slowdown follows a lack of large deals, with only two leases exceeding 100 KSF versus six the previous month. The figure is also 19% below the 10-year monthly average, highlighting persistent challenges for office leasing in the market.
Submarket Impact and Top Deals
Midtown South registered the sharpest monthly decline, dropping more than 50%. Year-over-year, Downtown leasing activity plunged 70%. The largest deal was Fanatics’ 213 KSF lease at 95 Morton Street in Midtown South. Latham & Watkins extended and expanded to 251 KSF total at 1285 Avenue of the Americas, while the NYC District Council of Carpenters Benefit Funds expanded in Midtown South.
Vacancy Edges Up as Rents Rise
February saw the office availability rate tick up to 13.6%, the first increase in two years. Net absorption registered at negative 200 KSF. Yet, office rents grew 0.3% to $77.22 PSF, the ninth straight monthly gain and their highest since August 2020. The pressure from rising vacancies is also pushing some owners to consider alternative uses, as a growing number of underutilized office buildings in Midtown are being evaluated for residential conversion amid the city’s apartment shortage. Office leasing may be challenged, but Manhattan’s rent resilience continues to contrast declining demand.
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