New York City office
and retail Market Research

November 2023

November 2023 New York Commercial Real Estate Market Report

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Office:
Manhattan available office space is at an all-time high of 19.4%. Davis, Polk and Wardwell signed a 710,000-square-foot extension and expansion at 450 Lexington Avenue and the New York City government leased 641,000 square feet at 110 William Street.

Retail:
Retail rents are inching higher as tourism increases and office workers slowly return.

Building Sales:
Buildings sales slowed as interest rates are near recent highs and banks lending on commercial properties is reduced or is in limited supply.

New York Market Overview

Office:

Office leasing in activity jumped 26% from the second quarter to the third. But much of that was upheld by two large leases and availability remained at record highs. Finding office tenants has been a slog for Manhattan landlords.

Midtown and Midtown South have improved as “flight to quality” companies upgrading to better Class A space. Midtown South’s availability hit a new all-time high with an 18.6% jump.

One of New York City’s prominent real estate law firms is going out of business, Stroock & Stroock & Lavan. Their demise is a blow to New York’s real estate industry. Stroock’s collapse will open up more space in the vacancy-plagued Manhattan office market. The law firm occupies 193,000 square feet at 180 Maiden Lane near the South Street Seaport.

In the third quarter of 2023, Class B and C properties had already depreciated 20% since the start of the pandemic.

Activity in Lower Manhattan more than doubled quarter-over-quarter and is up by 16.2% in the past year. However, the gain was driven by three leases: the city’s at 110 William and its extension 255 Greenwich Street, and the Tower Research Capital’s new, 122,000-square-foot lease at 120 Broadway.

Financial services, insurance and real estate firms accounted for 31% of activity, followed by the public sector (23%) and the professional services industry (22%).

Weill Cornell Medicine agreed to a deal in a booster for the owners of 575 Lexington Avenue. The medical institution renewed 200,000 square feet at the Midtown office property. The renewal accounts for administrative space, while the addition is for patient care facilities expected to open by 2025.

The Soloviev Group has agreed to lease nearly 100,000 square feet at 9 West 57th Street to the Davidson Kempner Capital Management who is taking the 24th, 28th and 29th floors.

Nowhere is office distress more evident than with WeWork.

Third Point put 89,000 square feet at 55 Hudson Yards up for sublease through July 2029. Third Point is asking $165 per square foot.

Selendy Gay Elsberg signed a lease that expands the law firm’s footprint at 1290 Sixth Avenue to 101,000 square feet. Asking rents are about $110 per foot in that portion of the building.

Retail:

Times Square’s retail rents averaged $1,342 per square foot. That’s a 40% jump from last year, when rents hit a pandemic-low of $959 per square foot in the district.

The neighborhood counted 16 retail leases for 108,000 square feet signed last quarter. Soho . had more than double the activity of second-place Grand Central, which saw four deals comprising 47,000 square feet.

The average asking retail rents surged for the fifth straight quarter, notching a mark of $663 per square foot. Still far away from its 2014 peak, when average asking rents were 40% above last quarter’s levels. Ground-floor availability increased for the first time in more than two years, as more than 200 spaces were vacant last quarter.

  1. The apparel industry signed 19 leases for 156,000 square feet. Banana Republic’s 30,000-square-foot short-term lease at 515 Broadway in Soho.
  2. Amish Market leased 15,000 sf for a five-year renewal at 731 Ninth Avenue.
  3. Met Fresh leased 14,000 sf signed a 20-year lease. At 67-09 Fresh Pond Road.
  4. Saint Laurent leased 13,000 SF at 70 Gansevoort for 15-years.
  5. Alicart Restaurant Group is preparing to open a Mexican eatery next door to his 15,000-square-foot Mermaid Oyster Bar.
  6. Carl Hansen & Søn leased 9,063 SF at 145 East 57th Street.
  7. Delight Bazaar Supermarket leased 6,500 SF at 1041 Coney Island Avenue for 10-years.
  8. Sweet Cats Cafe | 21 East 17th Street | Flatiron | 3,900 sf.
  9. Shake Shack signed a lease for 2,727 SF at 82-11 37th Avenue.
  10. FABrx leased 2,200 SF at 21 East 13th Street.
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