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Manhattan Office Leasing: More Sublease Shrinkage in Q3
In Q3 2023, Manhattan commercial real estate leasing activity reached 4.2 million square feet, declining by 18% from Q2 2023 and 44.8% from Q3 2022. Despite this, overall vacancy decreased slightly to 16.5%, marking the first drop since Q4 2021. Only 425,000 square feet of new inventory was delivered during the quarter, contributing to the decline in vacancy. According to JLL’s Q3 2023 Manhattan office report.
Class A vacancy decreased while Class B vacancy increased, reflecting a shift in demand toward higher-quality spaces. Sublease vacancy also fell for the second consecutive quarter, reaching 4.1%, as sublessors withdrew large blocks of sublease space for their own use.
Direct asking rents saw a slight decline to $81.55 per square foot due to muted leasing activity. The financial services sector dominated leasing volume, with law firms representing a substantial portion at 26.3%. The development pipeline is expected to narrow significantly, with the lowest square footage under development in seven years, totaling 12.3 million square feet.
- ◦Lease
