CBRE: Local Economy Shows Signs of Improvement as Manhattan Office Market Slows Amid COVID-19 Uncertainty

21 Jul 2020

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COVID-19 took a toll on the U.S. in the first half of 2020. Once the epicenter of the outbreak, New York City has dramatically reduced the rate of new infections in recent months, thus setting the stage for a reopening of its office market and a resumption of business activity. Several indicators suggest that the local economy is improving. Nevertheless, most companies are taking a tentative approach to reoccupying Manhattan’s office workplaces, and average daily building occupancy remains at less than 10%.

 

Leasing activity in Manhattan fell by 44% year-over-year in H1 2020 to 8.3 million sq. ft. (just 2.2 million in Q2) as most occupiers opted to hold off before proceeding with any new lease obligations. Average asking rent in Manhattan office in H1 remained near its record high at $81.30 per sq. ft., though a period of price discovery is now emerging.

 

“Despite an uptick of sublease listings in June, the amount of sublease space in the market slighted declined in H1,” said Nicole LaRusso, Director of Research and Analysis for CBRE’s Tri-State Region. “The pipeline of potential additional sublease space is growing, but the ‘shadow space’ on the horizon, including the addition of underperforming flex spaces, does not threaten to overwhelm the market at its current level.”

 

Manhattan’s overall availability rate reached 12.1%, which is the highest it’s been since May 2017. It is anticipated to increase further throughout the year.

 

The full H1 2020 Manhattan Office ViewPoint can be viewed here.  

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.