Manhattan’s office market roared back to life in May, with a staggering 70% jump in leasing activity. The resurgence was driven by a few major deals, particularly in Midtown, according to the Real Deal.
Midtown alone saw nearly 2 million square feet of office space snapped up, contributing to a total of about 3 million square feet leased across Manhattan’s three central business districts.
This marks a significant year-over-year increase, bringing the market closer to its pre-pandemic highs and one big step farther from 2020.
“Pre-pandemic, on any given month, we were on average well above 3 million square feet, so it is always noteworthy when we talk about leasing volume with that number in the same sentence,” Franklin Wallach, executive managing director of research and business development at Colliers, who authored the report, told the publication.
The leasing frenzy was turbocharged by several massive deals.
Leading the pack was Bloomberg’s lease extension at 731 Lexington Ave., the biggest lease since 2019, which alone accounted for a third of May’s leasing volume. Additionally, three separate deals at 22 Vanderbilt totaled more than 300,000 square feet.
“A few sizable deals really helped drive the activity during the month of May,” Wallach added. “The market is always subject to being swayed by a few outsize deals, and mega deals have a weighted impact on the demand.”
In another positive sign, sublet supply — a crucial market indicator — fell for the third straight month. However, it’s still up nearly 73% from March 2020 levels.
Meanwhile, the availability rate nudged down by 0.1%, indicating a stable trend. Despite availability growing almost 80% since before the pandemic, less than 10% of the negative absorption has occurred over the past year.
“Even though demand is still struggling to keep up with supply, we’ve seen signs of stabilization in many market areas,” Wallach said. “It’s not a foregone conclusion. We certainly have to see how demand and supply balance each other out for the rest of the year.”
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