New York City office leasing rebounded but figures still falling short from pre-pandemic levels

According to Colliers International Group Inc. the office leasing volume rose 27.6% to 9.23 million square feet a heavy quarterly gain since the end of 2019 in New York

NEW YORK: As compared to last year same quarter, the New York City’s office market rebounded, though leasing figures remained below against the rise of remote work during the COVID-19 pandemic, and higher interest rates and a strong dollar dampened new investment in the sector.

So far this year leasing volume has totalled 24.17 million square feet, or nearly 50% more than the same period in 2021 and less than 4% from passing last year’s total. Volume remained below the quarterly average of about 9.1 million square feet in the five years through 2019.

Frank Wallach, executive managing director of New York research at Colliers said, “We’re still hearing of large pending deals,” adding that leases in the works for months typically close by year’s end.

“Not all but a good number of them come to a close as we approach the post-Thanksgiving, pre-New Year’s Eve rush because there’s usually that desire to get everything wrapped up and taken care of,” Wallach said.

The availability rate for office space went down by 0.8 percentage points and stood at 16.4% in the third quarter, the sharpest quarterly decrease in eight years, Colliers said.

The drop drove availability to its tightest since March 2021, but still far above its 10.2% level in the first quarter of 2020, at the start of the pandemic, Wallach said.

The latest data on potential future leases for New York office space from View The Space Inc, a multidimensional commercial real estate platform, last week showed a 22.8% drop in August for new leasing demand in New York.

VTS expects leasing activity to be “pretty good” for coming months, but if more new demand is not seen by year’s end, leasing can be expected to decelerate in 2023, VTS said.

“The next quarter or two will be really telling because we’ll get to see people who’ve been in the market, do they end up transacting or not?” said Nick Romito, VTS chief executive.

The sale of office buildings fell 71% in the third quarter to $1.2 billion, an amount that often accounted for single asset sale during red-hot 2015 and 2016. Rising interest rates was the most significant factor for slower sales, Colliers said.

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