Manhattan’s Office Market Rings in the New Year with Optimism

Throughout 2024, Manhattan’s office market maintained strong leasing activity. Large block deals were a key factor in the market’s best performance posted since before the pandemic. Reports indicated there were 44-plus transactions of 100,000 square feet or more last year, some of the most notable were the 1.118 million-square-foot deal by New York University at 770 Broadway, Blackstone Group’s 1.06 million-square-foot extension and expansion deal at 345 Park Avenue, and Bloomberg LP’s 946,815-square-foot and 749,035-square-foot extensions at 731 Lexington Avenue and 919 Third Avenue respectively. While there’s no guarantee 2025 will see a similar magnitude of big-block deals, there are no signs of activity slowing down — at least on the immediate horizon, and due to a few “mega-tenants” that are currently in the market, the possibility exists that 2025 could match the level of leasing in 2024. Further contributing to a lowering of vacancy within the office market is an increasing interest around office-to-residential conversions. Although developers continue to “view the concept with a mixture of optimism and skepticism,” there has been a growing enthusiasm within the real estate industry about the tax incentive programs being offered in both this year’s New York State budget and the Adams Administration’s City of Yes package.  Some major real estate firms have already started work on conversions projects, including the recent permit filing by SL Green Realty and RXR, along with Apollo Global Management for the conversion of the 1.1 million-square-foot 5 Times Square into a mixed-use development that will deliver 942 residential units in 659,968 square feet plus 247,952 square feet of commercial space.

Source:    https://www.crainsnewyork.com/real-estate/new-york-office-market-starts-2025-positive-momentum

Source:    https://www.connectcre.com/stories/manhattan-office-leasing-posts-best-performance-since-2019/