Office Leasing Slows While Consumer Activity Ramps Up
Lower Manhattan office leasing slowed during the second quarter as vacancy rates marked highs, surpassing 20%, across the three Manhattan office markets, according to the Alliance for Downtown New York’s Q2 2022 Lower Manhattan Real Estate Report.
While slightly ahead of the first half of 2021, Lower Manhattan office leasing remains 45% lower than the five-year quarterly average and in tandem with growing vacancies is pushing asking rents downward. This was the third consecutive quarter with overall rents below $60 per square foot. Notable new leases in the second quarter included a significant expansion by Jane Street Capital and the relocation of luxury fashion designer Alexander Wang’s global headquarters to the Fulton Market Building in the Seaport. Alexander Wang will be joining a growing number of prominent fashion industry tenants in Lower Manhattan, including Hugo Boss, Gucci, Nike and Golden Goose. Since 2015, 75 companies in the retail trade sector have relocated their offices to Lower Manhattan.
“Office leasing activity was certainly slower than expected this past quarter and it’s too soon to say if it was a temporary setback or if it reflects a new baseline in the evolving landscape,” said Jessica Lappin, President, Alliance for Downtown New York. “We have however seen continued demand on the residential front and a response from the real estate community to kickstart conversions on at least five properties within the district to meet that demand.”
The second quarter saw visitors returning to Lower Manhattan in increasing numbers as well as positive momentum in the hotel and retail markets. Hotel occupancy was up to 77% in the second quarter and up 22% over the last year as business and leisure travel resumed. On the retail front, the neighborhood saw thirty-four openings and noted the second consecutive quarter during which retail openings outpaced 2019 levels. New additions included The Wall Street Hotel, an Urbanspace food hall and a pair of French restaurants Le Gratin and La Marchande, as well as an announcement from Century 21 that it will return to its flagship location.
Read the full Q2 2022 Lower Manhattan Real Estate Report.