market research

November 2017

November 2017 NYC Commercial Real Estate Market Report

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Manhattan Office:

Manhattan office vacancies increased despite a strong leasing market as more new office construction comes online in Hudson Yards and Downtown. Office prices have declined and will continue to do so slightly, as increased supply continues to rise once buildings are completed.

Manhattan Retail:

Manhattan retail prices have fallen 23% from the peak, as tenants refuse to sign leases that do not make economic sense. The question is have retail rents fallen enough?

New York Market Overview

  • Total Manhattan Class A Office vacancies increased from 9.2 % vacant to 9.3 % vacant
  • Total New York City Office vacancy increased from 8.4 % vacant to 8.6 % vacant
Office rents declined or remained flat in Midtown, Midtown South and Downtown in the third quarter, dropping to $72.86 per square foot from $73.83 last year. Office Rents Downtown ended the quarter at $63.15, down from last quarter, but up from $58.85 last year.

Manhattan office leasing in the third quarter climbed 35% to 9.85 million square feet as financial services added jobs. Rents have leveled off or declined as landlords are competing with new construction in Midtown West and Downtown.

Office properties have started to see sale prices fall.

Manhattan office sales volume fell below $1 billion in the third quarter for the first time in five years, average rents fell 20% year-over-year to $851 per square foot.

Midtown had its best quarter for office leasing since 2015, with 4.8 million square feet. Midtown South leased 1.1 million square feet, and Downtown had 1.4 million square feet leased, a 70% increase year-over-year.

Total Manhattan Class A Office vacancies increased from 9.2 % vacant to 9.3 % vacant


Retail Rents declined in 12 of 16 Manhattan corridors, down nearly 25% off their peaks.. 506,000 square feet of retail was leased in the quarter, though 60% was for short-term deals.

Retail properties traded at an average price of $1,051 per foot during the first half of 2017, down almost 10% year-over-year. That is a dramatic change from the 32% rise the sector saw in the same period last year.

The number of ground-floor availabilities on Manhattan’s busiest shopping strips continue to decline from the peak earlier this year. There were 197 ground-floor availabilities in the 16 major retail corridors, falling for the second quarter from the peak of 212 spaces in the beginning of the year. The overall average asking rent fell 13.4% year-over-year to $711 per square foot.

Times Square saw the most activity with nearly 64,000 square feet worth of deals.

The New York metro area has the highest number of zombie foreclosures in the nation.

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