A few weeks before Labor Day weekend, the COVID testing sites in the heart of Midtown’s large corporate corridors of Sixth Avenue, Park Avenue and Third Avenue were nearly empty of visitors. Some of the smaller tents were even abandoned by nose sweepers, as few people were examined.
It’s not because more people are getting tested at home. Only a few months ago, the lines were long. The reason is that the pandemic is over for all but the most COVID-obsessed New Yorkers. Hospitalization is rare, except for unvaccinated older people.
This bodes well for the Manhattan office market. It doesn’t mean a quick return to the great ‘old days’. But despite dire predictions about the impact of working from home and downsizing businesses, the reality is that until people finally get back to safety, we never really know what the future holds.
CBRE reported Friday that August Manhattan leases (new and renewed) reached their highest level since December 2019. Lease’s total of 2.93 million square feet put him 42% above his five-year monthly average for the month.
CBRE’s Paul Myers said the “strong month underscores continued improvement in 2022 over 2021,” with year-to-date leasing up 71% from the same period in 2021. It said it increased to 16.6 million square feet. Availability also dropped slightly.
The positive data follows a pessimistic report just a month ago by the technology platform’s VTS Office Demand Index. Demand for office space in New York City fell 16% in July compared to June levels, and that demand was found to be just 57% of its pre-pandemic pace.
Did the picture change that much from July to August?
Well, kind of: Two large leases totaling 630,000 square feet It was signed in August for KPMG (which will move to Two Manhattan West in 2025) and law firm Freshfields Bruckhaus Deringer (which will move to the Three World Trade Center). KPMG is shrinking 350,000 square feet.
Even in normal times, monthly fluctuations can be confusing and misleading. Numerical calculations were even less useful in an uncertain pandemic year. It will likely be brighter by Labor Day 2023. The new CBRE numbers bode well.