Demand for Manhattan office space slowed down last month, as it continues to chase its prepandemic highs.
Manhattan office-leasing volume declined 26% in April from March, according to the newest report on demand from Colliers International. However, the office vacancy rate fell to 15.7%, the lowest since February 2021.
The drop in leasing volume, while stark, isn’t completely surprising, said Franklin Wallach, chief economist for Colliers. March saw particularly high activity — the highest volume since December 2019. April’s volume is still above the monthly average for the two decades prepandemic, 2000 to 2019, Wallach said. And if leasing activity continues on pace, it would make 2025 the strongest full year of demand since 2000.
“Compared to March 2020, demand has absolutely gotten back to that prepandemic level,” Wallach said. “There is still an oversupply, but we have really moved toward chipping away and getting us slowly almost back.”
Colliers declined to discuss the potential impact of recent market uncertainty and trade policy on the office market. However, French investment bank Natixis said Wednesday that a lack of certainty around trade policy is causing instability that is likely to slow down the sector’s recovery.
Demand for office space has varied significantly by industry. The tech sector, for example, is still at half of its prepandemic demand for office space, Wallach said, while legal services has surpassed its prepandemic rate.
Midtown took the top spot in leasing activity last month, at 1.8 million square feet, and had the highest average asking rent, at $80.51 per square foot per year, compared to Midtown South and downtown. It also had the lowest vacancy rate. Leasing activity was 24% lower in Midtown South and 84% lower downtown than in Midtown.
The five largest transactions by volume in April were all new leases, according to the report. Amazon closed the largest of them, renting 330,000 square feet at 10 Bryant Park. Goodwin Procter relocated from Midtown to Midtown South, making the second-largest transaction at 244,000 square feet. And Apollo Global Management rented out 96,000 square feet at 590 Madison Ave., making it number three.
