The pandemic-era “doom loop” that supposedly threatened New York City’s future turned to a boom loop, as Manhattan’s 450 million square feet of offices are now more full than before the COVID pandemic emptied out skyscraper floors.
Three major brokerages found that demand has driven up rents at a frenzied pace. CBRE said Manhattan “asks” rose nearly 4% since a year ago.
Even so, “asking rent averages don’t tell the full story,” said CBRE research director Michael Slattery.
“The best space is being leased quickly, leaving lower-quality space on the market. As a result, rent growth for the most desirable floors is likely higher than overall figures suggest,” he added.
Another brokerage firm, Colliers, cited a rise in Midtown asking rents from $80.71 per square foot to $84.99 year-over-year.
In the best Class-A buildings, the increase was even greater. Asking rents leapt from $75.44 per square foot to $$94.91 in the same period – a 9.9% increase, according to Savills.
CBRE’s full market survey won’t be out until next week. But third-quarter surveys by Colliers and Savills found availability at 13.1% and 13.4%, respectively, the lowest since early 2020.
The intense expansion frenzy actually produced a down side. Vacancy in the best modern, amenities-filled buildings is barely 12%, according to both surveys — making it near-impossible for tenants seeking to add employees.
“I have law tenants who want to add more than 50,000 square feet and there’s close to zero available,” said a prominent commercial broker who declined to be named.
“Forget the pandemic — we haven’t seen a market so tight for premium floors since before 9/11,” the broker added.
The third-quarter boom was driven by major new leases, renewals and expansions across every Manhattan submarket, from the World Trade Center to 625 Madison Ave. at East 58th Street. The latter isn’t even built yet, but it’s where financial/insurance firm General Atlantic signed with developer Related Companies for 150,000 square feet.
Law firm Proskauer Rose renewed and expanded to 476,000 square feet at 11 Times Square. AI powerhouse Anthropic leased the entire 465,000 square-foot building at 330 Hudson St.
Meanwhile, even as demand shows no sign of letting up, no additional inventory will become available for years at such planned projects as Vornado and Ken Griffin’s 350 Park Ave., BXP’s 343 Madison Ave. and SL Green’s 346 Madison Ave.
“Nobody’s moving to New Jersey yet, but some companies are thinking about it for support staff,” the broker said.
Impatience is widespread. JLL broker Kristen Morgan recently told The Post that tech and AI tenants couldn’t wait for a planned new Hudson Square tower that would take 18 months to build.
“They want butts in seats now,” she said.