Lower Manhattan Real Estate Overview, Q1 2024

Lower Manhattan Real Estate Overview, Q1 2024

The Alliance for Downtown New York’s quarterly report provides data on commercial office, retail, residential, hospitality and development projects from Q1 2024. Major findings include:  

Downtown Leasing Activity Improves Year Over Year While Still Lagging Behind the Five-Year Average 

Lower Manhattan recorded 582,000 sq. ft. of leasing activity, a 16% improvement from last year’s Q1 and a 1% decline over the quarter. Leasing lagged 35% behind the five-year average and 18.9% behind the post-pandemic average. The Technology and Legal sectors lead leasing in Q1 as new exciting tech companies came on the scene. Lower Manhattan recorded a positive absorption for the first time in a year as two office buildings were taken off the market and are now planned to become residential conversion projects. 

Vacancy Rates Increased

Lower Manhattan’s vacancy rate climbed to 24.7%, the highest the district has seen. One of the primary reasons is that large chunks of space entered the market – as did considerable sublet spaces. The Midtown and Midtown South submarkets also saw increases in vacancy.

Retail Openings Continued Upward Trend

Sixteen retailers opened during the first quarter, with approximately two thirds being food and beverage businesses. One major opening was Mercer Labs Museum of Art & Technology, a new technology-forward museum featuring AI art and digital, immersive art spaces that are now open at 21 Dey St. 

Tourism Continued Rebound in 2023

Lower Manhattan welcomed 9.4 million tourists in 2023, a 27% increase from 2022. Furthermore, Lower Manhattan’s first quarter Average Daily Room rate (ADR) hit $225.69, the highest Q1 rate in the past eight years and notably higher than Q1 2023. Lower Manhattan hotels also enjoyed the highest Q1 occupancy rate since 2008. At 74%, occupancy declined from Q4 as it always does, but outperformed Q1 2023 by 6%.