The city’s office market had a strong finish to 2024, providing plenty of reasons for optimism even as it has yet to fully recover from the devastating impact of the pandemic.
Firms leased about 10.2 million square feet of space during the fourth quarter in Manhattan for its strongest fourth quarter since 2019, while the leasing volume for the full year was about 33.3 million square feet, according to the latest office report from Colliers. This was up 22.4% from 2023 but still lower than 2019’s total of about 43 million square feet.
Bloomberg’s expansion to about 925,000 square feet at 919 Third Ave. was the largest lease for the fourth quarter, followed by Citadel taking 504,000 square feet at 660 Fifth Ave., where the investment firm had long been rumored to be eyeing space. Law firm Ropes & Gray taking about 430,000 square feet at 1285 Sixth Ave. came in third. The three Midtown deals combined made up almost a fifth of Manhattan’s total activity during the quarter.
Manhattan ended the year with a 16.5% availability rate, its lowest since September 2022, according to the report. The borough’s available space is still up 65.6% from March 2020 at about 89.2 million square feet, but this is down significantly from the 96.5 million square feet of space a year ago. Net absorption for 2024 was about 7.3 million square feet, its strongest in 10 years, and landlords took about 4.8 million square feet of office space off the market for potential conversions.
Average asking rent dropped to $73.42 per square foot, the sixth consecutive quarter it went down.
Frank Wallach, executive managing director at Colliers, described the office market’s end to the year as “fundamentally positive” but noted it is still facing a surplus of space “almost equal in size to the entire World Trade Center submarket.”
“Pockets of the market returned to pre-pandemic leasing volume while others continued their march towards reaching pre-pandemic availability,” he said. “Nonetheless, the momentum seen in 2024 must continue in 2025 to achieve overall recovery in the market.”
In Midtown, firms leased about 6.3 million square feet of space for the quarter and 19.2 million square feet for the year, making 2024 the neighborhood’s strongest leasing year since 2018, the report says. Its availability rate tightened to 15.2%, while its average asking rent dropped to $77.89 per square foot. In addition to the Bloomberg, Citadel and Ropes & Gray leases, JPMorgan Chase also extended its lease for about 361,000 square feet at 277 Park Ave. during the quarter.
In Midtown South, firms leased about 3.4 million square feet of space for the quarter and 11.6 million square feet for the year, making 2024 its strongest year since 2019, according to the report. Its availability rate fell to 17%, and its average asking rent dropped to $78.57 per square foot. The neighborhood’s largest fourth-quarter deals were Apple extending and expanding to about 398,000 square feet at Penn 11, WeWork leasing about 304,000 square feet on behalf of Amazon at 330 W. 34th St. and TPG taking about 301,000 square feet at The Spiral in Hudson Yards.
Things were much quieter downtown, where companies leased 550,000 square feet for the quarter and about 2.6 million square feet for the year, making 2024 the neighborhood’s slowest year on record. Average asking rent did tick up slightly to $57.03 per square foot, while its availability rate shrunk to 18.8%, largely due to landlords taking about 3.7 million square feet of office space off the market for planned conversions. The neighborhood’s largest deals for the quarter included Freshfields expanding its 3 World Trade Center sublease to 45,000 square feet and Industrious leasing 40,000 square feet at 11 Park Place.
