New York Market Overview
Office:
New York City’s office demand index increased by 7.4% year-over-year. Office occupancy will increase to 55% to 65% by year-end and likely set a post-pandemic record. On the most popular midweek days it could trend over 80%.Office leasing has begun to rebound. Gross leasing volume is up 11.6% from this time last year, the fastest growth rate since mid-2021.
New York’s office market remains challenged, as a result of the work-from-home policies that became popular during the pandemic lockdown. The office occupancy rate was just 48% the week of July 26th.
Office landlords will take lease renewals over tenant departures, but even those renewals aren’t what they once were. Lease signings are on the rise, but occupied office space across the country is declining. That’s due to tenants grabbing less space for less time and growing more flexible about their waning office needs.
Tenants signed new deals for 97.5 million square feet in the second quarter, a big increase over the 57.4 million square feet in the same period in 2020. Yet the country’s vacancy rate has risen from 9.5% pre-pandemic to 13.2%; projects that to surpass 17% by the end of 2026. The discordant numbers are rooted in softer renewals. The average office lease was slightly below 3,300 square feet in the second quarter, a decrease of 19% from the average between 2015 and 2019.
Davis Polk & Wardwell has signed a renewal and expansion deal totaling more than 700,000 square feet at 450 Lexington Avenue. In a 25-year lease extension, Davis Polk will expand its footprint by 30,000 square feet.
The Department of Citywide Administrative Services’ has a new 630,000-square-foot lease at 110 William St. in lower Manhattan.
Empire State Development is leasing 117,000 SF across five full floors at 655 Third Avenue.
Mousse Partners signed a lease at 9 West 57th Street for the entire 33,000-square-foot, 43rd floor.
Pointstate Capital signed a lease at 9 West 57th Street for 20,000 square feet on the 37th floor.
Panco Management signed at 9 West 57th Street for an 11,700-square-foot deal on the 33rd floor.
The Spiral, a 66-story, 2.8 million-square-foot office tower, is 75% leased. Asking rents range between $125 and $225 per square foot. Marshall Wace signed a 14-year lease for 79,000 square feet on the entire 32nd floor and a portion of the 33rd floor. Marshall Wace will relocate from 350 Park Avenue. ProShares signed a 9,000-square-foot lease on the 28th floor in early 2024. A third global asset management firm signed a 13-year lease to occupy 24,000 square on the 34th floor.
Amazon has leased about 300,000 SF in new and renewal leases at WeWork spaces in Midtown: 90,000 SF at the WeWork space at 75 Rockefeller Plaza and renewed space for 210,000 SF at 1440 Broadway. Amazon is still set to open its 500,000 SF office at 424 Fifth Avenue.
Retail:
- Wegmans is opening an 87,500 store at 770 Broadway in October.
- Cotton On has opened its first physical location at 512 Broadway, containing 18,500 sf.
- Danny Meyer is to close two Manhattan restaurants in Redbury Hotel Marta, located at 29 E. 29th Street and Maialino at 30 E. 30th Street.
- A City law that demands landlords squash illegal weed shops went into effect. The enacted bill will slap fines up to $10,000 on landlords who knowingly lease commercial space to unlicensed marijuana sellers.
- Arc'teryx opens a New York City store at Brookfield Place. The store will be 2,970-square-foot.
- Herval will open in October at 200 Lexington Avenue, the New York Design Center in Manhattan.
Industrial - New York City:
Industrial property has been perhaps real estate’s best performing asset class in the past decade. Year-over-year growth was strong last quarter, with asking rates for industrial space reaching $9.48 per square foot, up 18.4% from a year ago. The growth rate is expected to cool, however. Absorption tumbled 41.3% year-over-year as 61.9 million square feet were absorbed.A new warehouse is in the works near JFK International Airport, where the market seems to be for logistics properties.
