Downtown Office Leasing Stable in Q3, Positive Absorption Continues

Lower Manhattan’s office market posted a 16% quarter-over-quarter increase for the third quarter of 2024 driven by a diverse set of nonprofit tenants. Recording its second highest quarterly leasing total since 2022, leasing was also up 10% year-over-year, signifying that the market has found some stable footing. Further, the quarter marked the third consecutive quarter that positive absorption has been created, with more office space leaving the market than entering due to residential conversions. 

Lower Manhattan recorded 682,000 square feet of new leasing in the third quarter. This total represented the only positive quarter-over-quarter growth among the three Manhattan submarkets. The nonprofit sector, long an anchor of Lower Manhattan’s office market, led all industries with a 27% share of leasing activity. Among these deals were the Catholic Charities of the Archdiocese of New York’s 77,130 sq. ft lease at 90 Maiden Ln. and Legal Aid Society’s 39,971 sq. ft lease at 55 Water St. The largest single deal of the quarter was from ticket sale giant Stubhub, which subleased a 103,188 sq. ft. space at 4 World Trade Center. 

Additionally, office-to-residential conversions have taken large swaths of office space off the market. In Q3, Lower Manhattan experienced 709,000 sq. ft. of positive absorption, bringing the year-to-date total to over 1.4 million sq. ft. The planned conversion of 77 Water St. contributed greatly to last quarter’s total.

“Leasing has remained stable, and we’re starting to see signs of the office market consolidating while it adjusts to the post-pandemic landscape,” Downtown Alliance president Jessica Lappin said. “The residential market continues to perform well, and is poised to grow even more with at least eight office-to-residential conversion projects in the pipeline.”

Downtown’s hotels enjoyed a second straight quarter of record occupancies, matching the 89% rate experienced in the last quarter. Q3’s rate surpassed the same quarter in 2023 by 7% and eclipsed the pre-pandemic figure by 1%. Lower Manhattan’s Average Daily Room Rates also posted its highest Q3 on record at $303.62. The current hotel inventory for the neighborhood stands at 8,548 rooms across 44 hotels. 

Finally, Lower Manhattan saw 19 new retail openings in the third quarter, nearly all of which were food and beverage businesses. One large addition was Halo, a 30,000 sq. ft., 750-person capacity event space which opened up at 28 Liberty St. Looking ahead, 11 retailers have announced plans to open, including the highly regarded Ess-a-Bagel, which will open at 115 Broadway.  

Read the full report here.