New York City Market Update: Vacancy Falls for First Time in 2021

At the end of May, Manhattan’s office vacancy clocked in at 10.4 percent, according to CommercialEdge data. The month-over-month drop represents the first decrease in vacancy of the year for the borough.

Despite a year-over-year increase of 240 basis points, Manhattan’s vacancy rate is still the lowest among gateway markets and falls well below the national average of 15.6 percent. In San Francisco and Los Angeles, rates were in the 13.5-14 percent range, with Washington, D.C., and Chicago still topping the list with 15.8 and 16.8 percent vacancies.

In mid-May, SL Green Realty Corp. inked a 22,531-square-foot agreement with Kyndryl at One Vanderbilt in Midtown’s Plaza District. The IBM spinoff will move its global headquarters to the $3.3 billion skyscraper that opened last September. That month the Plaza District, the submarket with the largest office stock within Manhattan, had a vacancy of 11.8 percent, roughly 140 basis points higher than the borough’s overall average.

In Brooklyn, the average vacancy rate for office space dropped 10 basis points month-over-month to 15.2 percent and marked a 320-basis-point increase year-over-year. There was a significant gap between Class A and Class B properties, with vacancies hitting 23.6 percent and 6.2 percent, respectively. One of the borough’s biggest leases for the year was St. Francis College’s 30-year commitment at Tishman Speyer’s recently completed The Wheeler in downtown Brooklyn. The long-term lease spans 255,091 square feet across the fifth, sixth and seventh stories of the 10-story building.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.