The Manhattan office market is on track to hit a 20-year low for leasing volume. Asking rents declined and availability expanded significantly this August, according to Colliers’ monthly Manhattan office snapshot, as the city continued to grapple with uncertainty around the future of one of its most important asset classes.
“If leasing volume continues at the same rate for the remainder of the year, 2020 would end up the lowest leasing volume so far this century,” the brokerage firm wrote in the report released Sept. 1.
While some big deals in the final four months of the year could prop it above the lowest point in 20 years, it is unlikely that leasing will be close to last year's leasing numbers.
“If the math continues along the same trajectory we will have 20.53M SF of leasing activity for 2020 ... anything can certainly change, a couple of mega-deals closing over the next few months, for instance, can completely change that trajectory," Colliers Head of Research Frank Wallach said. "However, it’s highly doubtful that even in that scenario, we end 2020 anywhere near the 43M SF of leasing volume we saw in 2019.”
Leasing activity dropped by nearly half — from 2.39M SF to 1.3M SF — from July to August alone. Volume dropped by 20.9% year-over-year in August, according to the report. At the same time, availability is on the rise; in August, it hit its highest rate since 2013 at 11.8%, 0.8% higher than the month prior.
Monthly absorption was negative for the sixth month in a row and asking rents declined 1.3% from July, hitting $78.01 per SF, the report showed.
The office market is in flux amid a work-from-home revolution and public health crisis. Not many returned to the office in June when office buildings were allowed to reopen under Gov. Andrew Cuomo’s plan for reopening. Tech giants such as Facebook and Twitter announced in May that some working from home would be permanent.
Office subleasing around the city is expected to rise, experts told Bisnow in July. Condé Nast is reportedly in talks to break its 25-year, 200K SF lease at Durst’s One World Trade, while Moody’s is seeking a subletter for its 75K SF lease in the same building.