Manhattan rental data shows decline in fourth quarter of 2022

There is good news, of sorts, for nervous office owners in Manhattan:

Rental for 2022 totaled 23.21 million square feet, up 14% from a year earlier, according to CBRE. But how could that not be the case, given the pandemic freeze of 2021?

The bad news: Most of the fourth quarter data is bad. Availability was slightly higher at 19.2% from the prior quarter, and 1.54 million more square feet were leased than vacated — “negative absorption” — CBRE said. That’s worrisome, as fourth quarters often show better results as tenants and landlords jostle for deals.

The Manhattan market “has been impacted over the past quarter by tenant reluctance to make long-term decisions in light of an expected national economic downturn,” said Michael Slattery, associate field research director from CBRE.

At least he noted that “year-to-date rental activity was healthier than in 2021 when the pandemic was in full swing.” Availability in the fourth quarter was slightly lower than the 19.6% recorded in February and November of last year.

Other CBRE Highlights:

  • Midtown Q4 activity fell 30% from the five-year quarterly average of 3.70 million square feet. But full-year rental of 14.81 million square feet was up 15% from 2021.
  • Midtown South’s rental of 1.06 million square feet was 37% below the five-year quarterly average of 1.26 million square feet.
  • Downtown rental of 784,000 square feet in the fourth quarter was 25% below the five-year average of 1.05 million square feet. On the bright side, year-round rental of 3.13 million square feet was up 12% from 2021.
Downtown was the only market to show positive net absorption in the fourth quarter.
Downtown was the only market to show positive net absorption in the fourth quarter.
Bloomberg via Getty Images

Downtown was the only market to show positive net absorption in the fourth quarter. The net increase of 566,000 square feet brought the year-end total for the FiDi area to 466,000 square feet.

Other brokerages have offered different numbers, although they point to the same generally negative trends. (Data differs because companies count different building samples).

Newmark cited a total of 32.9 million square feet of rental in 2022, up 15% from 2021. Colliers said 4Q rental fell 46.5% year-over-year to 4.94 million square feet, reflecting the “largest quarterly decline in demand since the second quarter of 2020.”

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