Manhattan’s pandemic-battered office market is on the verge of a remarkable recovery, exciting business advocates and restaurant owners as well as landlords.
Manhattan’s office market bottomed out in 2023 with a vacancy rate of more than 20%, but the near-term future looks brighter, according to a new report from national real estate technology platform VTS.
Demand for space in the Big Apple rose nearly 40% year-over-year in 2023, according to the latest Quarterly Office Demand Index (VODI), with demand rising to 75% of pre-pandemic levels.
In contrast, demand for office space across the United States grew by an average of only 19.6%. The New York City market is the largest in the United States at approximately 500 million square feet. According to brokerage firm CBRE, runner-up Los Angeles has just 317 million square feet, while hotly anticipated Miami has just 41 million square feet.
Ryan Masiello, VTS’ chief strategy officer, said VTS’ data tends to lead the market by six to nine months.
“Our projections are that New York City’s gross leasable area will top 30 million square feet this year, the highest since pre-pandemic,” he said.
New York City saw approximately 43 million square feet of new leases, expansions, and renewals in 2019.
According to CBRE, the total area of transactions conducted in 2023 was 26 million square feet, an 11% decrease from 2022.
VTS numbers reflect the amount of space companies are seeking, not actual new leases or expansions.
That data is based on lease offers, corporate visits to office buildings to “kick the tires,” and other types of information that VTS obtains from client landlords, and Masiello said it is It is said that it accounts for 80%.
Mary Ann Tye, CEO of CBRE Tri-State, said the VTS data “confirms what our own research is seeing and what brokers are feeling ‘on the ground’.” I commented.
Kathryn Wylde, president of the business advocacy group Partnership for New York City, said the survey’s findings “result in many of our members renewing their leases or moving into newly renovated or brand-new spaces. “This is consistent with anecdotal evidence from our members.”
She said: “Our major office employers and tenants, the financial and professional services industry, account for a significant portion of the tax revenue that funds local government services.
Keeping these businesses and their employees in the city is not only good for the economy, but essential to the quality of life in all five boroughs. ”
Several deals that were in the works last year actually closed this week.
Barclays Bank has renewed its lease for 1.1 million square feet at 745th Street, people told the Post. Investment banking advisory firm Evercore has added 95,000 square feet to Fisher Brothers Park Avenue Plaza, increasing its footprint there to more than 500,000 square feet.
Meanwhile, Blackstone, Jane Street Capital and American Express are among the top tenants, reportedly looking for larger spaces to relocate or expand in Manhattan.
Experts say the renewed energy in Manhattan is due not only to a growing belief that a return to the office is gaining momentum, but also to a broader sense that Manhattan is no longer a “ghost town.” It is analyzed that this is a factor in a broad sense that it is not dangerous except in some areas.
Dan Biedermann, president of the Bryant Park Corporation and 34th Street Partnership, said, “Subways and suburban trains are much more crowded than last year. That’s what happened.”
The leasing boom could also be good news for restaurants in business districts.
Mark Packer, a partner at Abra Group, which owns three large restaurants in Midtown, said the VTS forecast is “important to the health of the retail/restaurant business and the fundamental ecosystem of the city.” .
Dino Arpaia, owner of Cellini’s on East 54th Street, said he may have more employees in his office on days when the restaurant is sometimes “empty.”
He said the trend back to the office hasn’t helped parts of East Midtown as much as other areas.
“Monday and Friday are still missing,” he said.
