The Manhattan office market concluded Q4 2024 on a high note, with leasing activity far surpassing historical averages and positive net absorption indicating continued demand for office space. Despite economic uncertainty earlier in the year, the market showed resilience, ending 2024 with robust leasing volumes, increased renewals, and declining availability.
The full-year leasing activity totaled 23.54 million sq. ft., reflecting a 24% increase compared to 2023. Notably, Q4 alone accounted for 6.97 million sq. ft., placing it 41% above the five-year quarterly average of 4.93 million sq. ft.
Leasing and Renewals: A Strong Finish to 2024
Q4 leasing activity was exceptionally strong, totaling 6.97 million sq. ft., a significant 41% increase over the five-year quarterly average. This surge in demand resulted in a year-end total of 23.54 million sq. ft., reflecting a 24% year-over-year increase in leasing activity.
Renewals also played a key role in supporting market stability, with 4.05 million sq. ft. of renewals in Q4. Over the course of the year, renewals totaled 9.96 million sq. ft., underscoring tenants’ long-term confidence in Manhattan’s office market.
Declining Availability and Positive Absorption
The availability rate declined by 80 basis points (bps) from Q3, ending the quarter at 18.5%. This marked an even more substantial improvement year-over-year, with availability down 150 bps compared to 2023.
Net absorption was positive 3.72 million sq. ft. in Q4, contributing to a year-to-date total of positive 6.97 million sq. ft. Positive absorption across multiple submarkets signals ongoing recovery and demand, even as tenants continue to navigate hybrid work models.
Rental Rates: Modest Fluctuations Amid Strong Demand
The average asking rent closed Q4 at $76.83 per sq. ft., reflecting a slight 1% decline quarter-over-quarter, though it remained flat year-over-year.
Meanwhile, the sublease availability rate dropped by 30 bps quarter-over-quarter, finishing at 4.1%, with sublease asking rents up 1% from one year ago, reaching $57.97 per sq. ft. The rising sublease rents suggest growing interest in flexible leasing options, particularly among tenants seeking shorter-term commitments.
Key Market Highlights
- Leasing activity totaled 6.97 million sq. ft. in Q4, representing a 41% increase above the five-year average.
- Full-year leasing volume reached 23.54 million sq. ft., a 24% increase year-over-year.
- Renewals totaled nearly 10 million sq. ft. for the year, with Q4 alone accounting for 4.05 million sq. ft..
- Availability rates declined by 80 bps quarter-over-quarter, closing Q4 at 18.5%, and were down 150 bps year-over-year.
- Net absorption was positive 6.97 million sq. ft. for 2024, signaling steady tenant demand across the market.
- Sublease availability declined, with rents rising by 1% year-over-year, reflecting increased demand for short-term leasing options.
Outlook: Manhattan Office Market Poised for Growth in 2025
As the market heads into 2025, the positive trends observed in Q4 provide a solid foundation for continued recovery. Leasing activity is expected to remain strong, driven by firms seeking prime office space in a competitive environment. Although challenges such as high availability and economic uncertainty remain, Manhattan’s ability to attract new tenants and retain existing ones highlights its enduring appeal as a global business hub.
Landlords who focus on offering flexible leasing options and modernized spaces are likely to benefit from sustained demand. With declining availability and steady rental rates, the Manhattan office market is poised for gradual improvement in occupancy and further absorption in 2025.
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