There is good news, of a sort, for nervous Manhattan office landlords:
Leasing for 2022 totaled 23.21 million square feet, up 14% over the year before, according to CBRE. But how couldn’t it be, given the pandemic freeze of 2021?
The bad news: most fourth-quarter data stunk. Availability was slightly higher at 19.2% than in the previous quarter, and 1.54 million more square feet were leased than vacated — “negative absorption” — CBRE said. That’s ominous, because fourth quarters often show better results as tenants and landlords scramble to finish deals.
The Manhattan market “was impacted during the last quarter by tenants’ hesitancy to make long-term decisions in light of an expected national economic slowdown,” said Michael Slattery, CBRE’s Associate Field Research Director.
At least, he noted “year-to-date leasing activity was healthier than in 2021 when the pandemic was in full swing.” Fourth-quarter availability was slightly less than the 19.6% recorded in both February and November of last year.
Other highlights from CBRE:
- Midtown Q4 activity fell 30% behind the five-year quarterly average of 3.70 million sf. But full-year leasing of 14.81 million sf was up 15% over 2021.
- Midtown South leasing of 1.06 million sf was 37% lower than the five-year quarterly average of 1.26 million sf.
- Downtown leasing of 784,000 sf in the fourth quarter was 25% lower than the five-year average of 1.05 million sf. On the brighter side, year-long leasing of 3.13 million sf was up 12% over 2021.
Downtown was the only market with positive net absorption in the fourth quarter. The net increase of 566,000 square feet brought the FiDi area’s year-end total to 466,000 square feet.
Other brokerages came up with different figures, although they indicate the same mostly negative trends. (The data differ because firms count different building samples).
Newmark cited total 2022 leasing of 32.9 million sf, up 15% over 2021. Colliers claimed 4Q leasing fell by 46.5% year over year to 4.94 million sf, reflecting the “sharpest quarterly drop in demand since Q2 2020.”