Lower Manhattan Real Estate Overview, Q2 2022
The Alliance for Downtown New York’s second quarter report provides data on commercial office, retail, residential, hospitality and development projects. Major findings include:
Commercial Leasing Shows Noticeable Decline and Office Availability Continues to Grow
The second quarter saw Lower Manhattan record 606,000 sq. ft. of office leasing. This is the second consecutive quarter during which leasing activity fell in Lower Manhattan. While activity rose slightly over 2021 levels, leasing dropped 31% quarter over quarter and is 45% lower than the five-year quarterly leasing average. A combination of sluggish leasing and growing vacancies continued to push asking rents downward. This quarter marks a record in which the overall vacancy for all three Manhattan office markets was over 20%.
Median Apartment Rents Abate Slightly
The median rent in Lower Manhattan fell to $4,000, down over 9% from the record high seen last quarter. Rents are now on par with where they were in 2019. Rental prices in the neighborhood appear to be cooling after three consecutive quarters during which Lower Manhattan’s median rent broke record highs. Declining rents in Lower Manhattan may signal a bellwether for the higher end of the local rental market, but ongoing demand, limited supply, a lack of concessions and a busy summer rental period suggest that overall rents may continue to rise.
New Retail Openings and Reopenings Abound
A number of sit-down and casual restaurants opened, many replacing vacancies created during the pandemic, including Le Gratin, Chambers, and Warren Peace. Urbanspace opened a large food hall at 100 Pearl Street and Century 21 announced it will be returning to its flagship location.
Tourism Picks Up and a New Luxury Hotel Opens
Hotel occupancy has improved markedly over the last year as business and leisure travel resume in New York, noticeably among traditional western European and Canadian markets. The Wall Street Hotel, a new luxury property, began to welcome guests. The building recently completed a conversion from an underutilized office property. The hotel also features La Marchande restaurant, a rooftop bar and terrace, and a private penthouse ballroom.