Manhattan Office Market Poised for Remarkable Rebound
Manhattan Office Market Shows Signs of Recovery
The Manhattan office market, which was severely impacted by the pandemic, is now on track for a spectacular rebound. This news has not only delighted landlords but also business advocates and eatery owners.
Positive Outlook for the Manhattan Office Market
A recent report from VTS, a national real estate technology platform, reveals that the short-term future of the Manhattan office market looks promising. The report, called the Quarterly Office Demand Index (VODI), indicates that demand for office space in the Big Apple increased by nearly 40% in 2023 compared to the previous year. This surge in demand brings it to 75% of pre-pandemic levels.
Comparatively, office space demand across the United States grew by an average of only 19.6%. With nearly half a billion square feet, the New York City market is by far the largest in the nation. In contrast, Los Angeles has 317 million square feet, and Miami has a mere 41 million square feet, according to CBRE, a brokerage firm.
Insights from VTS Chief Strategy Officer
Ryan Masiello, the Chief Strategy Officer of VTS, stated that their data tends to lead the market by six to nine months. He predicts that this year, New York City will surpass 30 million square feet of total leasing, the highest since before the pandemic.
In 2019, New York City witnessed nearly 43 million square feet of new leases, expansions, and renewals. However, deals made in 2023 totaled 26 million square feet, which was 11% lower than in 2022, according to CBRE.
It’s important to note that the VTS data represents the amount of space companies are seeking, rather than actual new leases and expansions. Their data is based on lease proposals, company visits to office buildings, and other information obtained from client landlords, who make up 80% of the market.
Mary Ann Tighe, the CEO of CBRE Tristate, commented that the VTS data aligns with their own research and what their brokers are experiencing on the ground.
Positive Impact on New York City’s Economy
Kathryn Wylde, the president of the Partnership for New York City business-advocacy organization, stated that the findings are consistent with anecdotal evidence from their members. Many businesses are either renewing leases or moving to newly renovated or brand new spaces. The financial and professional services industries, which are major office employers and tenants, contribute significantly to the tax revenues that fund municipal services. Keeping these businesses and their employees in the city is crucial for the overall quality of life across all five boroughs.
Several deals that were in progress last year have been finalized recently. Barclays Bank, for example, renewed its lease for 1.1 million square feet at 745 Seventh Ave. Additionally, Evercore, an investment banking advisory firm, expanded its footprint at Fisher Brothers’ Park Avenue Plaza by adding 95,000 square feet.
Optimism for Manhattan’s Office Market
Top-class tenants such as Blackstone, Jane Street Capital, and American Express are reportedly seeking large blocks of space to move or expand in Manhattan. Experts attribute this renewed energy in the Manhattan office market to growing confidence in the return-to-office trend and a broader sense that the city is no longer a “ghost town” or dangerous except in a few areas.
Dan Biederman, the president of the Bryant Park Corporation and the 34th Street Partnership, mentioned that subways and suburban trains are much more crowded than last year. This indicates a positive trend towards returning to offices.
Positive Impact on Restaurants and Businesses
A leasing boom in Manhattan would be excellent news for restaurants located in business districts. Marc Packer, a partner in Avra Group, which owns three large Midtown restaurants, emphasized the importance of the VTS forecast for the health of the retail/restaurant business and the overall ecosystem of the city.
Dino Arpaia, the owner of Cellini on East 54th Street, expressed hope that a leasing boom would bring more employees to offices, especially on days when his restaurant sees very few customers. However, he noted that the return-to-offices trend has not benefited parts of East Midtown as much as other areas, as it is still relatively quiet on Mondays and Fridays.
