Lower Manhattan Real Estate Year In Review 2021
The Alliance for Downtown New York’s annual year-in-review report provides data on commercial office, retail, residential, hospitality and development projects from 2021. Major findings include:
Office Leasing Improves, But Vacancies Mount
The past year saw a recovery in leasing activity — 24% higher than the record low set in 2020. However, leasing in Lower Manhattan was still the second lowest annual total over the past decade. Office vacancies continued to mount with direct and sublet spaces being added to the market, reaching their highest level in decades. Class A towers are driving office leasing, as the flight to quality trend, where tenants are upgrading to better located buildings with strong amenities and updated building systems, takes hold of the market.
Residential Market Rebounds
The strength of the Lower Manhattan market became evident in the second half of 2021, as median rents went from record lows to record highs, signifying a strong demand to live in the neighborhood. On the sales front, buyers sought to take advantage of increased savings and near-record low interest rates, as over 520 units were sold in 2021 — nearly double the sales from 2019.
The release of the 2020 Census reported that Lower Manhattan’s population rose to nearly 61,000 — 33% higher than in 2010 and a massive four-fold increase from 2000. With a steady pace of new residential construction and office building conversions, Lower Manhattan was the 4th fastest growing neighborhood in New York City and the fastest growing in Manhattan.
Retail Openings Return to Pre-Pandemic Levels
The pace of retail openings returned to pre-pandemic levels, with nearly 100 retailers opening in 2021. A number of new full-service dining options opened, while the long-anticipated Alamo Drafthouse movie theater debuted. Furthermore, businesses that were thought to be permanently shuttered because of the pandemic, reopened or announced plans to reopen. The number of retail closures have also slowed significantly from 2020.
Hotels Reimagine Themselves
Over the past two years, eight hotels have been repositioned to new uses, reopened under new ownership and/or reflagged with new hotel brands. Since the pandemic began, Lower Manhattan has seen the number of hotel rooms remain steady, despite the tumultuous market. Positive momentum continues as tourism and business travel has started to rebound.
Infrastructure and Open Space Continue to be a Focus
New bicycle infrastructure was introduced and the NYC Ferry added new routes to Lower Manhattan and expanded deeper into the outer boroughs. The Battery unveiled a new playground, while Governors Island was approved for a rezoning and the coming years will see an increased focus on its sustainable development. The city released a resilient infrastructure plan to protect Lower Manhattan from future flooding, calling for the creation of a two-level waterfront that extends the shoreline of the East River by up to 200 feet.
Check out our COVID recovery dashboard for more information on our initiatives and trends we’re seeing across real estate, transportation, population and pedestrian traffic in the district.