New York City office
and retail Market Research

March 2023 » Market Analysis » Market Report

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April 2023

March 2023

Office:
The health of Manhattan’s office market continued to decline in 2022, as return-to-office initiatives fizzled yet again and hybrid workplaces became the new normal.

Office leasing activity plunged year-over-year in the fourth quarter, ending 2022 more than 30% lower than in the last quarter of 2021.

Retail:
Retail was quiet. Retail tenants are relocating to get better deals.

Sales:
Office investment sales have plummeted. Manhattan saw $1 billion in sales volume in the fourth quarter, an 85% decline from 2021. It was the largest annual decrease in five years. The median sale price was $725 per square foot, down from $874 the previous year.

New York Market Overview

Office:

Net absorption was down over the same period, ending the year at negative 2.8 million square feet, nearly 23% below the year-earlier figure.

The Manhattan office space improved marginally over the year to just below 17%, while average asking rent rose slightly to $75.41 per square foot. Midtown’s Plaza District was 621,000 square feet. Times Square area had a negative absorption of 484,000 square feet. Penn Plaza/Garment District submarket with net absorption of negative 1.3 million square feet. The Financial District has more than 25 %.

U.N. Plaza was the tightest office submarket with an availability rate of 5.2%, Greenwich Village at 12.8% and Columbus Circle at 12.9%.

In the fourth quarter of 2021, Class A was an average of 27.3% more than Class B and by the end of last year that gap had narrowed to 24.7%. The change was because the average Class B rent gained 2.17%.

The Class A premium varied widely across Manhattan’s submarkets. In Tribeca, tenants pay on average 127% more per square foot for Class A space than for Class B, and in Hudson Yards, the price is nearly double. In some places, such as Greenwich Village, Columbus Circle and the City Hall area, the premium for Class A space is less than 4%.

Retail:

Bed Bath & Beyond is closing two locations in Manhattan at 1932 Broadway and 460 Third Avenue.

Cotton On is opening its first Manhattan store in Soho. The 20,000-square-foot space at 512 Broadway has 7,000 square feet on the ground floor, 6,800 square feet on the lower level and another 6,100 square feet in a sublevel from Invesco, which was asking $275 per square foot.

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