New York Market Overview

With millions of square feet of new office construction coming online and the Manhattan office leasing market 23% slower than over the same two-month period a year ago. Manhattan’s overall net absorption stood at negative 2.65 million square feet year-to-date, a 131% increase over the same period last year. The availability rate also rose slightly to 11.2% from 10.6%. Asking rent is also up from $70.08 per square foot to $73.72.

Over the next five years, more than 20 million square feet of new office space in Manhattan is expected to be delivered. The office space is spread across 23 new buildings, with 6.5 million square feet in the Hudson Yards projects. More new office space is expected in Midtown East in the coming decades once the re-zoning is approved. 16 sites with the total of 6.5 million square feet of new office space could be added under the re-zoning.

In the Downtown office leasing sector, new development buildings held three of the top five office leases and average rents remained unchanged.

Midtown Manhattan office leasing at Hudson Yards boosted Midtown’s total activity. The average asking rent was unchanged.

Midtown South saw total office leasing activity fall below the five-year average and compared to last year, but rents remained steady.

In Midtown, leases totaling 1.82 million square feet were signed. Fashion shop Coach, which signed for 694,396 square feet at 10 Hudson Yards, accounted for the bulk of that increase. Still, Midtown’s net absorption stood at negative 2.65 million square feet year-to-date. The availability rate rose by 1.3% points to 12%, from 10.7%.

In Midtown South, leasing activity year-to-date fell, pushing net absorption into negative territory for the first eight months of 2016. The availability rate rose to 8.8% from 8.2% and the average asking rent fell to $69 per square foot, from $71.57 last year.

Downtown’s office market had a net absorption with 950,000 square feet in the first eight months of 2016. Downtown Office availability rate fell to 11.1% from 12.3% last year, and the average asking rent rose to $57.37, from $56.33.

Retail:
The retail market is experiencing a sudden burst of activity with a 10% uptick in Manhattan store leasing. Overall, Manhattan retailers inked 1,027 deals for a total of 2.9 million square feet, up from 990 deals totaling 2.6 million square feet during the same period in 2015.

Many global apparel brand expansion plans are on hold or in reverse, a more motley crew of tenants are taking space, making smaller deals, often in secondary locations or for long-vacant spaces.

Developers are bringing more than 3.1 million square feet of new retail space to New York City this year, including nearly 1 million square feet outside of Brooklyn and Manhattan. Average asking rents climbed to $57.25 per square feet, up 7% over the last four quarters.