Q4 2018 NYC Market Report
The Manhattan Office market ended 2018 with a vacancy rate of 7.9% – slightly up from 7.7% over the previous quarter. That said, the availability rate decreased again from 11.7% to 11.5%. Overall Manhattan office asking rental rates decreased to $74.60 from $75.79 PSF at the end of the fourth quarter.
The trend of New York’s office tenant migration and its nation-leading total square feet under construction could force the market to an inflection point over the coming years. Large office occupiers across many of Manhattan’s prominent submarkets such as Grand Central, Plaza District, and Times Square will eventually vacate their respective offices, which could put downward pressure on occupancy rates and ultimately further depress market rents.
Properties offering an updated office design, in neighborhoods with modern amenities, are more appealing to a growing percentage of today’s professional workforce. As a result, areas prime for new developments or major renovations, such as Hudson Yards, Penn Station & Downtown Manhattan, are top destinations for office tenants.