Manhattan office leasing in August hit highest level since COVID

In the weeks before the Labor Day weekend, COVID testing sites in the heart of Midtown’s great corporate corridors — Sixth, Park and Third avenues — had scarcely any visitors. So few people showed up to be tested that some of the little tents were abandoned even by the nose-swabbers.

It wasn’t because more people now test at home. Lines were long just a few months ago. The reason is that, for all but the most COVID-crazed New Yorkers, the pandemic is over. Transmission has declined for months. Hospitalizations are near-nonexistent for all but the unvaccinated elderly.

This is auspicious for Manhattan’s office market. It doesn’t mean an instant return to the great “old days.”  But for all the dire forecasts about the impact of work-from-home and corporate downsizing, the fact is that nobody really could know what the future held until people finally felt safe again.

CBRE reported on Friday that Manhattan leasing (new and renewal) in August reached the highest level since December 2019. The total 2.93 million square feet of leases was 42% ahead of the five-year monthly average for the month.

“The strong month highlighted the continued improvement of 2022 over 2021,” with year-to-date leasing of 16.6 million square feet up 71% over the same period of 2021, said CBRE’s Paul Myers. Availability dipped slightly as well.

The cheery data followed a gloomy report just one month ago from the technology-platform VTS Office Demand Index. It found that demand for New York City office space fell 16% in July compared with June levels, and that demand was a mere 57% of its pre-pandemic pace.

Did the picture really change that much from July to August?

Well, sort of: two large leases totaling 630,000 square feet were signed in August for KPMG (moving to Two Manhattan West in 2025) and law firm Freshfields Bruckhaus Deringer, which is going to Three World Trade Center. But while Freshfields is growing by 70,000 square feet, KPMG is downsizing by 350,000 square feet.

Even in normal times, month-to-month fluctuations can be confusing or misleading. The numbers-crunching was even less helpful during the uncertain pandemic years. It will likely be more illuminating by Labor Day of 2023. The new CBRE numbers bode well.

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