According to third-quarter data from Cushman & Wakefield, office rents are surpassing previous all-time highs for the three Manhattan submarkets – Midtown, Midtown South and Downtown – despite uncertainty in the financial markets and a decrease in overall leasing activity year-to-date.
Year-to-date leasing activity for Manhattan measured 18.3 million square feet at the end of the third quarter, down about 2.5 million square feet (12.3%) from this time last year.
Though year-to-date leasing is off, third-quarter leasing activity was, in fact, stronger than it was in either the first or second quarter. More than 6.5 million square feet was leased from July through September, compared to 6.3 million square feet in the second quarter and 5.4 million square feet in the first quarter.
"The slowdown in activity may be attributed primarily to a lack of supply and the historic highs to which rents have risen," says Joseph Harbert, Cushman & Wakefield's chief operating officer of the New York metro region. "Limited office space and continued demand has put upward pressure on rental rates, to the point where we have exceeded record highs."