The Manhattan office market continued to struggle until summer, centered on record vacancies.
Leases fell 3.9% in the second quarter to about 7.3 million square feet of office space, according to the company. Korea’s quarterly data Reported by Crain’s.
Manhattan’s second-quarter vacancy rate was 17.2%, a slight improvement over the previous quarter. However, it increased year-over-year and was not far from the record 17.4% vacancy rate in February.
Frank Walrack, Executive Managing Director of Koreas, said:
As more companies embrace the reality of remote work, demand for office space simply does not meet supply and has skyrocketed by 72.2 percent since the start of the pandemic.
If you look for them, there are positive signs. Leasing activity has increased since 2021. 15 million square feet were leased in the first half of this year, compared to 9.1 million square feet in the first half of 2021. Net absorption in the second quarter was 530,000 square feet, with a small dent at minus 38.9 million square feet. Absorption since Covid came.
In addition, landlords have robbed slightly more value for their money in recent months. Average asking rents have risen for the third consecutive quarter, reaching $ 75.61 per square foot, the first consecutive rise since 2019. Still, the average asking rent has dropped by almost 5% since the start of the pandemic.
The struggling office market is most felt downtown. Submarket vacancy rates rose for the ninth consecutive quarter, reaching a record high of 20.1% in the second quarter. On the other side of the spectrum, Midtown vacancy rate Since 2018, there has been the largest quarterly decline, down to 16.4%.
Office owners may have worse news on the horizon.Rising interest rates threaten asset value and office indexes from the stock market Is plummeting As the fear of recession grows.
[Crain’s] — Holden Walter-Warner