Lower Manhattan Posts Second Consecutive Quarter of Strong Office Leasing

Lower Manhattan’s office market logged its second consecutive quarter of encouraging movement, according to the Alliance for Downtown New York’s report on the neighborhood’s real estate market. Building on the gains made in Q1, the office market has enjoyed its strongest two consecutive quarters since before the pandemic. Leasing for the quarter was driven by several mid-to-large sized deals in diverse industries and an increase in relocation activity. Across the first two quarters, 2.23 million square feet of office space has been leased in Lower Manhattan this year, a sizable improvement over the first two quarters of 2024.

Lower Manhattan recorded 772,000 square feet of new leasing in the second quarter, 31% above the Q2 2024 total and 12% higher than the five-year average. Although the second quarter did not meet Q1’s total, that number was highly inflated by Jane Street’s Capital’s renewal and expansion. The two largest leases of the most recent quarter were Invesco’s 204,424 square-foot renewal at 225 Liberty St. and a 192,915 square-foot lease at One Wall Street from an unnamed financial services tenant. Also of note, video production company Atlantic Pictures relocated from Midtown to 100 Church St., where it signed a 66,012 square-foot lease.  

Although vacancy rates remain stubbornly high across Manhattan’s submarkets compared to pre-pandemic levels, Lower Manhattan has shown improvement for six consecutive quarters. The vacancy rate at the end of Q2 stood at 22.8%, which is a 1.8% improvement year-over-year. In addition, office asking rents, which have been in decline since 2020, increased over the quarter by 2.1%, a growth rate not seen since 2018. Finally, 89,000 square feet of office space left the market resulting in another quarter of positive absorption. 

“While some macroeconomic uncertainty remains, a second straight quarter of meaningful gains in the Lower Manhattan office market is cause for optimism,” Downtown Alliance president Jessica Lappin said.

23 new retail establishments opened their doors in Lower Manhattan in the second quarter, including an influx of fresh dining and beverage concepts that have further elevated the neighborhood’s culinary landscape. Highlights include the long-anticipated opening of the latest location of Brazilian steakhouse Fogo de Chão at 40 Cortlandt Way. As the first and only Brazilian steakhouse in the district, the restaurant adds to the neighborhood’s reputable steakhouse collection. Trendy new nightlight options like Lucky Tiger at 66 Pearl St. and Quick Eternity at 22 Peck Slip have also created a buzz in the neighborhood. 

Lower Manhattan’s hospitality sector enjoyed another successful Q2 by finishing with a $334 ADR and an 88% occupancy rate. Not only is this the highest Q2 ADR since the Alliance started recording these figures in 2016, but it is also the third highest ADR on record. Occupancy, which was 1% shy of its own record, increased 11% over the quarter. The current hotel inventory for the neighborhood stands at 8,534 rooms across 44 hotels. 

Read the full report here.