New York City office
and retail Market Research

February 2024

February 2024 New York Commercial Real Estate Market Report

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Retail:
Retail asking rents are on the rise in Manhattan, but still well below pre-pandemic levels. Sustained activity was a welcome development for the sector. Average asking rent is 20 to 30% lower than it was four years ago, hindered by office visitation numbers.

Manhattan Office:
The vacancy rate in Manhattan Office remained at a record-high of 17.9% in the fourth quarter.

The high end of the office market is doing well. The low and moderate range of the office market sector is suffering.

Building Sales:
Luxury retailers are buying Fifth avenue locations to house their brands. Prada bought 720 and 724 Fifth Avenue and LVMH is rumored to be in the market to buy the retail base at 745 Fifth Avenue.

New York Market Overview

Retail:

  1. Del Frisco’s Double Eagle Steakhouse renewal for 25,000 SF restaurant at 1121 Sixth Avenue.
  2. Madewell signed a 10-year lease to consolidate its two Brooklyn stores along North 6th Street in Williamsburg for 8,300 sf.
  3. Barnea Bistro signed a 15-year lease at 114 West 47th Street in Times Square for 7,602 sf.
  4. Max Deals, the home goods retailer, signed a 20-year lease at the base of a new residential construction located at 1049 Ogden Avenue in Highbridge for 5,800 sf.
  5. TFogo de Chão, the Brazilian steakhouse, signed a new lease in the Oculus mall at 3 World Trade Center in the Financial District for 5,009 sf.
  6. Form50, the pilates brand, expanded its lease at 135 East 46th Street in Grand Central for 5,000 sf.
  7. Flora Salon, the beauty salon, signed a 10-year lease at 89 Kent Avenue in Williamsburg for 3,000 sf.
  8. Leila Heller Gallery signed a lease at 22 East 80th Street on the Upper East Side for 2,800 sf.
  9. Hindman, the auction house, inked a lease for the space that formerly housed the Hammer Gallery at 32 East 67th Street on the Upper East Side for 2,500 sf.
  10. NY Gifts, the gift and souvenir shop, signed a lease at 366 Fifth Avenue in the Garment District for 2,258 sf.
  11. Yasubee Authentic Ramen, the Japanese restaurant, inked a 15-year lease at 322 Eighth Avenue in Chelsea for 2,138 sf.

Manhattan Office:

Premium office space fared better than the rest of the market. Tenants signed a record 192 leases for at least $100 per square foot last year and accounted for 26% of overall leasing, Total leasing activity finished 6% below 2022.

Financial services drove the demand for high-end office space, accounting for about three-quarters of $100-plus per square foot leases.

One Vanderbilt had the highest rent of the year with a $247 per square foot lease to AIMCO.

  1. The City of New York’s 538,000-square-foot extension at 150 William Street accounted for 40% of the activity in the fourth quarter.
  2. LaGuardia Community College, has renewed its 210K SF lease at 30-20 Thomson Ave. for another 10 years and occupies the first, second, third and lower floors.
  3. Paul, Weiss, Rifkind, Wharton & Garrison signed a 20-year lease for 765,000 square feet at 1345 Sixth Avenue in December.
  4. King & Spalding’s signed a lease for 175,000 RSF at 1290 Sixth Avenue. The asking rent was $105 per square foot.
  5. The Pratt Institute signed a 63K SF lease at Dock 72, BXP and Rudin’s 675K SF office building in the Brooklyn Navy Yard. The private college’s fine art and photography graduate facilities will occupy the entire third floor of the 16-story building, moving from the Pfizer Building at 630 Flushing Ave.
  6. DoorDash adds more than 57,000 RSF at 200 Fifth Avenue in addition to the space it already subleased from Yelp and has converted the 58,000 RSF sublease. The sublease was converted into a direct lease.
  7. Greater New York Mutual Insurance is renting 52,000 square feet at the Empire State Building and will occupy a full floor of the tower for 17 years.
  8. The Major League Baseball Players Association rented 50,000 RSF at 1325 Sixth Avenue. The asking rent was $77 per square foot. The 15-year lease covers the 29th and 30th floors.
  9. The Paul Taylor Dance Company signed a lease for 31,000 square feet at 307 West 38th Street for 30 years. George Comfort and Paul Taylor, will be able to claim an exemption from property taxes on the space.


Leasing activity for the year was 6% below 2022 with 27.25 million square feet. The office availability rate is still at a record high with 96.5 million square feet of available space 5% higher than last year.

Midtown’s office leasing total of 15.25 million square feet.

Midtown finished the year with 15.9% availability, a full five percentage points better than Downtown’s 20.9%.

Midtown South had a great 4th quarter with 2.21 million square feet.

Manhattan’s asking rent ticked downward by 0.6% for the quarter to $74.81 per square foot.

Wells Fargo purchased 377,000 square feet at 20 Hudson Yards from Related Companies and Oxford Properties Group at the Flatiron Building. 204,000 square feet officially came off the market, as it would convert the office building to residences.

The FIRE industries accounted for 33% of the office leasing. Professional services 26%, and public sector and consumer goods/retail industries tied 12%.

There are only three office building projects greater than 500,000 square feet in the city’s development pipeline, with two expected to open in the next couple of years.

There are 20 sizable projects that have been proposed are stuck at one stage or another and yet to break ground.

The largest new office building projects nearing completion include Two Manhattan West, 2 Penn, One Madison Avenue, Terminal Warehouse, and the “Googleplex,” the tech giant’s new space at 550 Washington Street.

Class-B office values increased by 3.17%. As such, the taxable assessed values also recorded increases of 3.43% for trophy offices, 3.01% for Class-A and 2.6% for Class-B.

Alexandria Real Estate Equities is unloading Pfizer’s former Midtown headquarters before the pharmaceutical’s leaseback deal is set to expire. Alexandria, an owner of offices and laboratories for life science tenants, is under contract to sell the 10-story building at 219 East 42nd Street. The buyer is David Werner.

WeWork has reached agreements with landlords at Dock 72 in the Brooklyn Navy Yard and 71 Fifth Avenue in Manhattan’s Union Square. The company will continue operations at both locations, in the second and third agreements the company has reached with New York City landlords since declaring bankruptcy. It has been unclear until now where WeWork would continue operating when bankruptcy proceedings wind to a close. The company has already canceled more than three dozen leases across the city and has a long battle ahead to remain afloat.

SL Green and RXR Realty’s Worldwide Plaza could find themselves in a world of hurt if two of its biggest tenants leave. Wall Street securities firm Evercore ISI recently reported an implied value for the Midtown Manhattan complex of $1.2 billion, down nearly a third from $1.7 billion in 2017.

Cushman & Wakefield is suing the co-founder of the company that owns Lord & Taylor over unpaid rent at a Midtown office building. Cushman filed the case against Jack Saadia, co-founder of the Saadia Group, and is demanding $2.5 million in back rent for three floors that he subleased at 275 Madison Avenue.

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