{"id":1004753776,"date":"2025-04-08T05:02:28","date_gmt":"2025-04-08T13:02:28","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004753776"},"modified":"2025-04-11T05:28:46","modified_gmt":"2025-04-11T13:28:46","slug":"where-office-space-wins","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/","title":{"rendered":"Where Office Space Wins"},"content":{"rendered":"\n

New York City is at the forefront of the evolving office shift, according to Newmark\u2019s new report, Winning Office: Where U.S. Office Space is Thriving and Why<\/a>.<\/p>\n\n\n

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\"New<\/a>
New York City is defying the national narrative, according to Newmark\u2019s latest office market research. Image courtesy of Newmark research<\/em><\/figcaption><\/figure><\/div>\n\n\n

Manhattan availability fell to 17.8 percent in the fourth quarter of 2024, representing the first time it was below 18 percent since early 2023.<\/p>\n\n\n\n

Sublease inventory is down more than 20 percent from peak levels, shrinking to 18 million square feet. Net absorption was positive for the second consecutive quarter, totaling 1.2 million square feet in the second half of last year.<\/p>\n\n\n\n

In Midtown, 78.5 percent of large-block availabilities are concentrated on base or mid-rise floors, as premium space is being claimed quickly.<\/p>\n\n\n\n

Newmark\u2019s Executive Managing Director of National Research Jonathan Mazur told Commercial Property Executive<\/em> that what stood out most to him was that New York City\u2019s commercial real estate recovery<\/a> is well ahead of all other major metropolitan cities.<\/p>\n\n\n\n

\u201cManhattan has recorded positive absorption in six of the previous eight months, and March leasing had the highest monthly activity since November 2019,\u201d he said.<\/p>\n\n\n\n

Leasing activity at multi-year highs<\/h2>\n\n\n\n

Avison Young reported that first-quarter 2025 leasing activity reached 10.1 million square feet, the highest amount since 2018. The availability rate (17.3 percent) fell to its lowest value since 2020. Trophy properties reached a decades-long high, accounting for 61.6 percent.<\/p>\n\n\n\n

Manhattan office busyness hit 71.2 percent in February, matching its 2019 (pre-pandemic) level, with the U.S. at 61.5 percent.<\/p>\n\n\n\n

In its first-quarter 2025 NYC office report, JLL NY Research Director Andrew Lim reported that the leasing volume reached 8 million square feet, a 31 percent increase from the first quarter last year.<\/p>\n\n\n\n

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READ ALSO<\/strong>: These Markets Top the List for Office Fit-Out Costs<\/a><\/p>\n\n\n\n

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\u201cDespite economic uncertainty ahead, market fundamentals in the city remain strong as tenant demand continues to exceed the amount of quality available spaces,\u201d Lim told CPE<\/em>.<\/p>\n\n\n\n

\u201cAs the amount of space under development decreases and demand for new construction continues unabated, developers who can begin new office projects sooner are likely to gain from a significant early mover advantage.\u201d<\/p>\n\n\n\n

Hudson Yards solidifies its position<\/h2>\n\n\n\n

Manhattan\u2019s drop in availability to 17.8 percent reflects steady leasing momentum, with trophy and well-located office spaces absorbing demand, according to Eric Grad, managing principal of the WCRE\/CORFAC International New York office.<\/p>\n\n\n\n

\u201cHudson Yards continues to solidify its position as a premier office hub, attracting top-tier tenants like Meta, KKR and BlackRock,\u201d Grad said. \u201cThe 20 percent decline in sublease inventory suggests companies are reclaiming space, mirroring moves like HSBC\u2019s relocation to The Spiral rather than downsizing.\u201d<\/p>\n\n\n\n

Two consecutive quarters of positive net absorption\u20141.2 million square feet\u2014signal sustained leasing demand, seen in deals like Wells Fargo\u2019s 400,000-SF lease at 20 Hudson Yards, he observed. Midtown\u2019s flight-to-quality trend is evident as firms target premium space, pushing demand toward recently built assets such as One Vanderbilt.<\/p>\n\n\n\n

\u201cThe Far West Side exemplifies this shift, with 85 percent of its office stock developed in the last decade, proving new, amenity-rich workplaces remain resilient despite broader market challenges.\u201d<\/p>\n\n\n\n

Action in less-than-A buildings<\/h2>\n\n\n\n

The flight to peak-quality offices has leveled out and spread to buildings rated slightly less than A in locations and build, according to Gordon Ogden, executive managing director in Bradford Allen\u2019s New York office.<\/p>\n\n\n\n

He told CPE that the Third Avenue corridor has tightened availability and increased rent.<\/p>\n\n\n\n

\u201cWe finalized a transaction at 825 Third Ave. (in between 50th and 51st streets) with average rents at $95 per square foot, which represents a premium for Third Avenue, but still good value for the Plaza District, which has routinely achieved rents of more than $150 per foot with good light and views,\u201d he said. \u201cLesser buildings have increased their rents by 10 percent.\u201d<\/p>\n\n\n\n

Meanwhile, he said residential conversion from office was previously just a good headline but not statistically significant.<\/p>\n\n\n\n

\u201cSubstantial office space is now being taken off the market,\u201d Ogden said. \u201cAt least seven Midtown buildings totaling more than 2 million square feet have been sold to developers negotiating with existing tenants to terminate their existing leases to create vacancies for residential use. Conversions in the financial district downtown are even more significant.\u201d<\/p>\n\n\n\n

VTS recently reported that in the fourth quarter of 2024, New York City experienced a 25.3 percent year-over-year increase in office demand, surpassing pre-pandemic levels, according to Marc DeLuca, CEO & Eastern regional president at KBS.<\/p>\n\n\n\n

\u201cWhile high vacancy rates and macroeconomic uncertainty still pose challenges, particularly in struggling Class B and C buildings, these indicators suggest NYC may be turning a corner,\u201d he said. \u201cThe next few quarters will determine whether this momentum is sustainable.\u201d<\/p>\n\n\n\n

Robert Martinek, director at EisnerAmper, told CPE<\/em> that many market participants believe the end of 2024 marked the peak of the office sector\u2019s problems.<\/p>\n\n\n\n

\u201cNew construction has been limited because the 10-year treasury has kept interest rates high,\u201d Martinek said. \u201cNew office construction is virtually non-existent in New York, and the demand for affordable housing has led to conversions of low-occupied office buildings and obsolete properties.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

This market is defying the national narrative, according to Newmark\u2019s latest research.<\/p>\n","protected":false},"author":3568,"featured_media":1004753805,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21784,21808,1600,21742,10,21747,51037],"tags":[33022,32796,50999],"class_list":["post-1004753776","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brokerage","category-featured","category-new-york","category-latest","category-northeast","category-office","category-trends","tag-avison-young","tag-jll","tag-newmark"],"acf":[],"yoast_head":"\nWhere Office Space Wins - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"New York City is at the forefront of the evolving office market shift, according to Newmark\u2019s latest research.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Where Office Space Wins\" \/>\n<meta property=\"og:description\" content=\"New York City is at the forefront of the evolving office market shift, according to Newmark\u2019s latest research.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2025-04-08T13:02:28+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-04-11T13:28:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/04\/NYC-skyline.png\" \/>\n\t<meta property=\"og:image:width\" content=\"802\" \/>\n\t<meta property=\"og:image:height\" content=\"610\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Richard Berger\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/\",\"name\":\"Where Office Space Wins - Commercial Property Executive\",\"isPartOf\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/04\/NYC-skyline.png\",\"datePublished\":\"2025-04-08T13:02:28+00:00\",\"dateModified\":\"2025-04-11T13:28:46+00:00\",\"author\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/#\/schema\/person\/6d4c5f1b2f682b3604ad9fe73c19fed7\"},\"description\":\"New York City is at the forefront of the evolving office market shift, according to Newmark\u2019s latest research.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/where-office-space-wins\/#primaryimage\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/04\/NYC-skyline.png\",\"contentUrl\":\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2025\/04\/NYC-skyline.png\",\"width\":802,\"height\":610,\"caption\":\"New York City is at the forefront of the evolving office shift, according to Newmark\u2019s latest report. 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