Lower Manhattan Real Estate Overview, Q2 2023
The Alliance for Downtown New York’s second quarter report provides data on commercial office, retail, residential, hospitality and development projects. Major findings include:
Large Lease Gives Major Boost to Commercial Leasing, But Office Availability Continues to Grow
The second quarter saw Lower Manhattan record 1,130,000 sq. ft. of office leasing — more than double the activity recorded in the first quarter and the highest quarterly total since the beginning of the pandemic. The significant uptick was driven by the NYC Administration for Children’s Services’ 641,000 sq. ft. lease at 110 William Street. Leasing remains sluggish in the rest of the market and Lower Manhattan office vacancy rates reached a new record high of 24.2%.
Median Apartment Rents Grow Across Manhattan
The median rent in Lower Manhattan rose to $4,500, up 7% from the beginning of the year after cooling from a record high at the end of 2022. Median rents are now nearly 13% higher than before the pandemic. Manhattan’s overall median rent rose to a new record high of $4,300, marking the sixth consecutive quarter above pre-pandemic rates amid high demand, tight supply, and competition from would-be homebuyers remaining in the rental market due to increased interest rates.
New Retail Openings Expand Lower Manhattan’s Shopping, Dining and Entertainment Offerings
A number of sit-down and casual restaurants debuted in Lower Manhattan, including a new outpost of the popular East-Village based 7th Street Burger and the virally-acclaimed Best Sicily Bottega. A 7,000 sq. ft. new Court 16 location added to the neighborhood’s roster of sports and fitness offerings, answering a vocal demand from residents for more family and recreational activities. Century 21 reopened its flagship location and Delmonico’s announced an upcoming reopening.
Tourism Picks Up, Boosting Hotel Occupancy and Room Rates
Hotel occupancy rebounded sharply from the previous quarter across Manhattan hotel markets. At 83%, occupancy nearly rose to parity with pre-pandemic levels citywide and in Lower Manhattan. Occupancy appears poised for further growth as business and leisure travel continue to recover in New York. Room rates rose to $305 amid high demand and Lower Manhattan’s growing inventory of luxury properties, including the upcoming Warren Street Hotel.