Offices in Manhattan are now emptier than ever, hitting a new record of over 18% vacancy in the first quarter of 2024, according to a report.
The office availability rate in the borough, which points to how much of the market is unfilled, had risen to 18.1% in the first three months of 2024. It is the highest vacancy rate ever recorded for Manhattan. The vacancy rate was just 17.9% in the last quarter of 2024 and 17.1% a year ago, as first reported by Crain's, citing data from investment management company Colliers.
Manhattan's office vacancy began to grow during the COVID-19 lockdowns, which forced businesses to shift to a hybrid or remote working model. Prior to that, the number was just 10% in March 2020.
Offices in Downtown Manhattan are struggling the most to get tenants, with the Financial District being the most stricken. Offices in Midtown Manhattan are faring better. Due to the rising vacancies, rents for office spaces in the borough have gone down by 0.2% in February.
That being said, the report noted that office vacancies are, at least, not rising as fast as they did during the peak of the COVID-19 pandemic.
"We are still waiting for demand to catch up and surpass supply. It's still the early innings of 2024, and there are both a fair number of large leases pending and a large number of tenants in the market. But we also anticipate some large blocks of space to be added," Colliers Executive Managing Director Franklin Wallach told the outlet.
National Office Vacancy
Colliers' report comes after Moody's Analytics in January reported that the national office vacancy rate rose to 19.6% in the fourth quarter of 2023. It was the highest reported since 1979, breaking a previous record of 19.3% that was first set in 1986 during a significant inventory expansion and the second in 1991 during the Savings and Loans Crisis. The surge also represented the largest quarterly increase since the first quarter of 2021.
In comparison, the average office vacancy rate before the pandemic was around 16.8%, the report noted.
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