The Manhattan office market continued its robust run through mid-year 2018, according to a new report released by CBRE. The Manhattan Office 2018 Mid-Year Review shows that Manhattan had 15.36 million square feet of leasing activity during H1 2018, the highest half-year total in more than three years.
“The strong mid-year numbers reflect the solid leasing momentum that has been building in Manhattan since early 2017. While the trend toward large-scale transactions continued through the first half of 2018, the resurgence of smaller deals of less than 50,000 square feet gave the market a significant boost,” said Nicole LaRusso, Director of Research & Analysis for CBRE Tri-State. “With a strong economy and a healthy pipeline of available space, we expect continued strong performance through the end of 2018.”
The FIRE sector (financial services, insurance and real estate) accounted for the largest share of leasing activity during H1. Real estate tenants were especially active in the market, as coworking and other flexible space providers continued to grow their footprint in the borough; flexible space providers accounted for 1.43 million square feet of leasing activity during the first half of 2018.
While leasing activity remained strong, Manhattan average asking rent fell to $72.20, a modest decline of 1% from year-end 2017 and a 2% decline from H1 2017. The average tenant improvement allowance climbed to over $94 per square foot and net effective rent fell to $45.12 per square foot. Net absorption was negative 2.4 million square feet and the availability rate was up 30 basis points (bps) from year-end to 11.8%.
Finally, investor interest remained high for New York assets. The sales market for larger office assets (above $30 million) totaled $8.7 billion during H1 2018, a 23% increase from the same period in 2017. The average sale price reached $838 per square foot, 4% ahead of the prior year.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE: CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated 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.
