Manhattan’s Office Market Recovery Leads U.S. Major Cities

Although Manhattan’s 12.7% office vacancy rate “remains double the 8% of days gone by in 2019, according to data compiled by Moody’s Analytics, the city’s “super-charged” return-to-office push has resulted in the borough’s office vacancy declining to the second lowest rate among the primary 82 office markets tracked by Moody’s. Although Palm Beach, Florida ranked first at 12.3%, it’s “an apples-to-oranges comparison” since according to online real estate platform Costar, its office inventory is about 29 million square feet compared to Manhattan’s 581 million square feet. In comparison to other major U.S. cities, where office vacancy rates are 36% in San Francisco, 29% in Los Angeles, 27% in Chicago, 26% in Houston, and 23% in Washington, D.C., Manhattan has fared better in part due to a tighter inventory despite being as immense as it is. Another crucial factor that has kept Manhattan in better shape is that “it missed an office building boom 40 years ago.” “Between 1980 and 1990, when nationwide inventory of office space grew at a compounded annual rate of 7.5%, inventory in New York grew at only a 1.5% rate, Moody’s said.” Increasing confidence in Manhattan’s office market, which has seen positive absorption over the last year, has led to developer BXP’s (formerly known as Boston Properties) willingness to start the construction of the company’s planned $2 billion, 930,000-square-foot office tower at 343 Madison Avenue without having secured an anchor tenant, which would be “New York’s biggest speculative office project since Larry Silverstein developed 7 World Trade Center in 2006.”

Source:    https://www.crainsnewyork.com/real-estate/manhattans-office-vacancy-lowest-any-major-city