A strong opening shot’ for Manhattan office leasing in January

The Manhattan leasing market continued its march toward recovery last month.

Tenants inked deals for 3.6 million square feet of office space, almost a million more than last January, according to a new Colliers report. Leasing volume jumped 24 percent from December, thanks to renewals, expansions and two large new leases at Related Companies’ 30 Hudson Yards.

Investment firm Stonepeak inked a 149,000-square-foot lease and Visa took 146,000 square foot lease at Steve Ross’ West Side supertall.

“January is always an interesting month,” said Colliers’ Franklin Wallach, one of the report’s authors. “There’s always an element of spillover from the slew of deals that are looking to close between Thanksgiving and the New Year.”

Strong leasing volume and office-to-residential conversions have netted seven consecutive months of positive absorption, according to Colliers. In Midtown, more than 850,000 square feet of space disappeared from the market due to planned conversions at 5 Times Square and 767 Third Avenue.

While leasing continues at a healthy pace in Midtown, Downtown is a different story. Last year’s leasing volume was the lowest ever recorded, according to Colliers. But conversions are gobbling up millions of square feet, making up the difference. Availability tightened last month in Midtown, Midtown South and Downtown.

The month’s largest lease was law firm Mayer Brown’s 331,000-square food renewal and expansion at Rockefeller Group’s 1221 Sixth Avenue. The size of the expansion was unclear, but the firm occupied 235,000 square feet of the former McGraw Hill building in 2018, according to Globe Street.

KnitWell Group — the parent company of brands including Ann Taylor, Chico’s, Lane Bryant and LOFT — inked another big expansion. The fashion company signed a 20-year lease for 246,000 square feet at Boston Properties’ 7 Times Square, expanding by 55,000 square feet.

The average asking rent held steady last month at around $73 per square foot, still about 8 percent below March 2020. But leasing velocity was 36 percent above the ten-year monthly average and sublet supply tightened for the fourth month in a row, hinting at a continued recovery.

“It is absolutely a strong opening shot,” Wallach said. “As to whether or not that continues, it’s hard to say.”