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Market Research - New York
USA

United States: New York/ Manhattan office market - 2020 overview

The Manhattan office market continues to struggle with the effects of the COVID-19 pandemic, as many businesses across the city stay shuttered after being obliged to close earlier in 2020.

Manhattan posts negative 16.3 million SF of annual net absorption

 

The Manhattan office market continues to struggle with the effects of the COVID-19 pandemic, as many businesses across the city stay shuttered after being obliged to close earlier in 2020. Annual leasing for 2020 totaled just 19.3 million SF. Net absorption measured negative 14.1 million SF in the second half of the year, pushed down by a combination of very quiet leasing and dozens of large sublet block additions.
Only a handful of large new leases were completed in the second half of the year, including Facebook's (730,000 SF), American Insurance Group's AIG (217,600 SF) and  Raymond James' (144,700 SF).
For the full year, leasing activity by submarket measured 19.3 MSF in Midtown, 12.6 MSF Downtown, and 3.3 MSF in Midtown South.
 

 

Availability rises, but asking rents remain healthy

A high number of large block additions, particularly sublet blocks, led to increased availability across Manhattan. The availability rate rose 290 basis points from mid-year 2020 to 14.8% at year-end, some 380 basis points above the year-ago level.  All three of Manhattan's major submarkets have experienced a significant increase in availabilities since the fourth quarter of 2019, and sublet availability now accounts for more than 26% of the overall rate.  Manhattan and its three main submarkets were experiencing peak rent levels just prior to the pandemic, and while asking rents have undoubtedly declined, they have not regressed an excessive amount. Manhattan rents fell 6.5% from mid-year to $75.63 PSF, still within 7% of their first quarter 2020 peak. Downtown saw the smallest change, falling 2.2% from the mid-year level to $63.85 PSF. Midtown South declined 8.1% from June to $75.07 PSF and Midtown saw a reduction of 7.8% from mid-year to $80.94 PSF.

 

 

Sales volume decreases 52.4% year-over-year

 

The 2020 annual total was $8.9 billion, just half of the $17.8 billion traded in 2019. Office volume measured $6.9 billion over 2020, a drop of 62% from the $14.5 billion dealt in 2019. The average office sale price was $755 PSF in the fourth quarter of 2020, an increase over mid-year, but a decline from 2019 levels. Large office deals were scarce in the second half of 2020, making it difficult to get an accurate read on pricing. The largest transaction was the $953 million dollar sale of the majority interest in the Master Printers Building at 410 Tenth Avenue. Manhattan cap rates logged a 2 basis point increase from mid-year to 4.9% at year-end, slightly above their year-end 2019 level.

 

At a Glance NYC office market 2020
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