Lower Manhattan Real Estate Overview, Q3 2024

10/31/2024
Lower Manhattan Real Estate Overview, Q3 2024

The Alliance for Downtown New York’s quarterly report provides data on commercial office, retail, residential, hospitality and development projects from Q3 2024. Major findings include:  

Downtown Leasing Rises 16% Over the Quarter, Marking Three Consecutive Quarters of Positive Absorption

Lower Manhattan’s office market saw a 16% quarter-over-quarter increase in leasing activity in Q3, reaching 682,000 sq. ft. This marks the second highest quarterly total since 2022 and the only Manhattan submarket with positive quarter-over-quarter growth. Strong net absorption of 709,000 sq. ft, fueled by office to residential conversions, contributed to this positive trend. The nonprofit sector led quarterly leasing, the fourth time in 21 years that this has occurred.

Vacancy Declines Modestly Over the Quarter, Still Remains Stubbornly High

The Lower Manhattan vacancy rate fell slightly to 24.4% in Q3, but remains stubbornly high. Approximately one quarter of Manhattan’s office space is currently unoccupied, and record-breaking rates remain common. Midtown South’s rate increased to 26.3%, a record high. While Midtown has fared better, its vacancy rate still hovers around 22%. Class A office space mirrors this trend, with Midtown South leading in vacancy rates.

Hospitality and Tourism Continue Their Resurgence With ADR and Occupancy at Record Highs 

Lower Manhattan’s hospitality market continues to thrive, with a record-high occupancy rate of 89% in Q3 2024, surpassing pre-pandemic levels. This trend is mirrored citywide, with NYC reaching a record 87% occupancy. Lower Manhattan’s average daily room rate (ADR) set a third quarter record of $303.62. This figure is up 9% year-over-year. While citywide ADRs have improved, they still lag 34% behind pre-pandemic levels.

19 Retailers Opened in Lower Manhattan This Quarter, the Most Since 2023 

17 of the 19 retailers were food and beverage establishments. This quarter also saw the opening of Halo, a 30,000 sq. ft, 750-person capacity event space.