The Manhattan office market looked like its old self last month, boosted by a few big Midtown deals.
Almost 2 million square feet of office space were leased in Midtown, and about 3 million square feet across all three central business districts in May, an increase of more than 70 percent year-over-year.
“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,” said Franklin Wallach, executive managing director of research and business development at Colliers, who wrote the report.
Leasing activity got a bump from a handful of deals, including the Bloomberg lease extension at 731 Lexington Avenue, which was the largest deal since 2019 and accounted for about a third of the month’s leasing volume. Three separate transactions at 22 Vanderbillt accounted for more than 300,000 square feet.
“A few sizable deals really helped drive the activity during the month of May,” Wallach said. “The market is always subject to being swayed by a few outsize deals, and mega deals have a weighted impact on the demand.”
Sublet supply, a key barometer of the market, was down for a third consecutive month – but is still up almost 73 percent from March 2020.
Meanwhile, the availability rate tightened by 0.1 percent, or was basically stable. Although availability has grown almost 80 percent since before the pandemic, less than 10 percent of the negative absorption has occurred over the last year.
“Even though demand is still struggling to keep up with the supply, we’ve seen in many areas of the market an indication of stabilization,” 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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