Manhattan office leasing increased more than 20% in August compared with July to 3.7 million square feet and was well above the 10-year monthly average of 2.72 million square feet, according to a new report from Colliers.

Manhattan

Manhattan office leasing activity increased by over 20% in August compared to the previous month, according to a report from Collier's. This surge places leasing volume well above the 10-year monthly average, with projections suggesting the annual volume could exceed 40 million square feet for the first time since 2019. The increase is largely attributed to strong demand from technology companies, such as Amazon, and the legal sector, both of which have secured significant office space in recent months.

A notable trend is the preference for newer office buildings, resulting in a lower availability rate of 6.7% for these properties compared to 17% for pre-war buildings. This tight supply has pushed average asking rents up by 1% from the previous month, though rents remain 6% below pre-pandemic levels. Additionally, office space conversions have removed nearly 9 million square feet from the market over the past four years, further impacting supply and pricing.

Manhattan office leasing jumps 20%. Here's what's behind it

Welcome back. A new report showing Manhattan office leasing is on track to hit some new highs. Our CNBC real estate correspondent Diana Olick looks at some of those numbers in today's property play. Morning, Diana. Good morning, Carl. Yeah, Manhattan office leasing increased more than 20% in August compared with July and was well above the 10-year monthly average according to a new report from Collier's. If demand continues at the same pace for the rest of this year, Manhattan's yearly volume would top 40 million square feet for the first time since 2019. Okay, so what's driving it? Well, tech. Amazon alone has leased, subleased, or entered agreements with co-working spaces for over a million square feet since November of last year. And also the legal sector, which leased a record 4 million plus square feet in 2023, slightly lower last year but still well above those 2019 levels. Now, there has also been a flight to quality to mostly newer buildings and that has made supply tight. The availability rate of newer office space dropped to just 6.7% compared with the rate for pre-war buildings at 17%. That tight supply pushed the average asking rent for Manhattan offices up 1% from July, which is actually sizable. Rents are, though, still 6% lower than March 2020 when the pandemic hit the U.S. Now, office conversions, they're also impacting supply and pricing. Collier's tracked nearly 9 million square feet of office space removed from the Manhattan market over the last four years. Now, for much more on this and other great stories, check out our new Property Play newsletter. It comes direct to your mailbox every Tuesday. Sign up at cnbc.com forward slash property play or use that QR code. Sarah? Okay, Diana, some good news there on New York City.

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