In the third quarter of 2023, Manhattan’s commercial real estate leasing activity decreased by 18% from the previous quarter and 44.8% from the same period in 2022, reaching a total of 4.2 million square feet. However, there was a slight decrease in overall vacancy to 16.5%, which marks the first drop since Q4 of last year. The delivery of only 425,000 square feet of new inventory contributed to this decline.
According to JLL’s Q3 report on Manhattan office space, Class A vacancy decreased while Class B vacancy increased as demand shifted towards higher-quality spaces. Sublease vacancies also saw a decrease for the second consecutive quarter at just over four percent due to sublessors reclaiming large blocks for their own use.
Direct asking rents experienced a slight decline at $81.55 per square foot due to subdued leasing activity during this time period.The financial services sector dominated leasing volume with law firms representing approximately one-quarter at26%. Additionally,the development pipeline is expectedto significantly narrow with only12 .3million square feet currently under construction -the lowest amount in seven years.
The article “Manhattan Office Leasing: More Sublease Shrinkage in Q3” originally appeared on Connect CRE.
