Avison Young releases Q4 2022 Manhattan Office Report

Report reveals +15.5% increase in leasing activity from 2021

New York, NY – Avison Young today released its Fourth Quarter 2022 Office Market Report for Manhattan. Key takeaways from the report include a +15.5% increase in leasing activity from Q4 2021 to Q4 2022, an 18.6% overall availability rate (20 basis points higher than Q3 2022 and reaching record levels), and a trend upwards of return-to-office rates, which currently sit at 55.7% vs. December 2019.

“There is no doubt that Q4 2022 has been challenging, however, Manhattan’s office market remains resilient as tenants seek quality of space to continue building their office cultures,” said Dorothy L. Alpert, Principal and Tri-State President. “In Manhattan, we are seeing an abundance of direct and sublease space, which will likely continue upward, furthering tenant-favorable market conditions. We expect a slowdown in investment activity, but as more people return to the office, it could be a catalyst for investor confidence.”

The Avison Young report indicates that landlords are offering historically large concession packages in an effort to compete with trophy properties. In March 2020, the gap between class A base and net effective rents was $10.04 per square foot (psf). In Q4, the gap has reached a record high of $21.15-psf. Leasing activity in 2022 outperformed 2021 with 32.4 million square feet (msf) vs. 28.1-msf and has reached the highest annual volume of leasing activity since 2020.