The Manhattan office market showed its first crack in two years in February as leasing slowed and availability ticked up.
Tenants inked deals for about 2.2 million square feet, a 39.5 percent drop from January and a nearly 30 percent year-over-year slide, according to a new Colliers report. But rents continued to climb for the ninth consecutive month to an average of $77.22 per square foot, the highest level since August 2020.
After a surge of leasing activity, demand dipped 19 percent below the 10-year monthly average of 2.76 million square feet. Unlike January, which saw six leases north of 100,000 square feet, February saw just two six-figure deals — Fanatics’ 213,000-square-foot extension and expansion at Meadow Partners’ 95 Morton Street and law firm Latham & Watkins’ 131,000-square-foot expansion at RXR’s 1285 Sixth Avenue.
The availability rate rose slightly (just 0.1 percentage points) to 13.6 percent, with 200,000 square feet of negative absorption. Still, overall supply has shrunk dramatically from pandemic highs, from a February 2024 peak of about 98 million square feet to about 72 million square feet, per Colliers.
Sublet space also inched up for the first time since September 2024, climbing by 510,000 square feet to 11.16 million square feet. Even so, sublet supply remains 6.2 percent below its March 2020 total and is down more than 28 percent year over year.
There were bright spots. Availability held steady in Midtown South and Downtown, and all three submarkets posted rent gains. Rents climbed in Midtown, Midtown South and Downtown.
For now, February’s dip appears more like a pause than a reversal.
“There were still silver linings in February that illustrated Manhattan’s continued recovery,” said Franklin Wallach, executive managing director of research & business development for Colliers in New York.
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