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The number of new office leases in Lower Manhattan jumped 16% in the first quarter of 2024 but are still lagging 35% behind the five-year average, according to a report released Thursday by the Downtown Alliance, a nonprofit organization that manages the Downtown-Lower Manhattan Business Improvement District.
Tenants in Lower Manhattan signed for 582,000 square feet of new office space in the first quarter of this year — an amount that is a single percentage point down from the fourth quarter last year. Prolific charter school network Success Academy inked the largest lease with a 93,937-square-foot expansion at 120 Wall St., according to the alliance.
And the first three months of 2024 also marked the first time in a year that more space in the district overall has been leased than vacated, thanks in part to the city’s plan to help the struggling housing market by converting empty office buildings into apartments, said Downtown Alliance President Jessica Lappin.
“As residential conversions continue to entice developers, the health of the commercial real estate market in Lower Manhattan could ultimately stand to benefit,” said Lappin, whose organization oversees the area roughly from City Hall to the Battery and from the East River to West Street. “These conversions will not only give more housing options to our residential population, but will [also] help reset the supply and demand across the office sector, as low-demand space leaves the market.”
Crain’s reported earlier this week that firms leased about 2.7 million square feet throughout all of Manhattan last month, and the boroughwide occupancy rate is still at a high of 18%, according to the latest data from Colliers.
In Lower Manhattan, meanwhile, the office vacancy rate ticked up to 24.7% — also the highest the district has seen, which Lappin attributes to new space entering the market.
For premier Class A office buildings in the district, the average asking rent fell to $59.16 per square foot, compared to $85.28 in Midtown and $91.43 in Midtown South, according to data from Cushman and Wakefield that was published in the alliance’s report. Boroughwide, the average asking rent dropped slightly to $74.11 per square foot, Crain’s reported.
The area’s tourism industry, however, fared better than other sectors. The average daily room price hit $225.69 — the highest first quarter rate in the last eight years and notably higher than last year, helping to buck the citywide trend of rates below $200. The district’s 43 hotels also enjoyed an occupancy rate of 74%, the highest in the first quarter since 2008, and a 6% jump from the same time period last year. The new boutique Warren Street Hotel opened in February at 86 Warren St., according to the alliance, adding 69 rooms to the more than 8,400 already available, including at the swanky Greenwich Hotel, Hotel Fouquet’s New York and The Beekman. Citywide, the hotel occupancy rate swelled to 82% last year, Crain’s recently reported.
And on the residential side, the median rent in the district hovered at $4,100, while the median sales price hit an 11-year-low at $930,000, Lappin said.
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Julianne Cuba , 2024-05-02 19:16:25
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