NYC Market Update: Lowest Vacancy Among Gateway Cities

In June, Manhattan’s office vacancy rate hit 10.9 percent, according to CommercialEdge data, maintaining its leading position among the country’s gateway markets with the lowest vacancy.

Below the national rate of 15.6 percent, the borough’s vacancy increased 180 basis point year-over-year and was 300 basis points higher than in 2019. Of the other gateway markets, Washington, D.C. and Chicago registered the highest vacancies, both over 16 percent, while Boston (11.7 percent) and Los Angeles (13.1 percent) joined Manhattan on the other side of the spectrum.

In early June, Legal Aid Society chalked up a significant long-term lease in Lower Manhattan’s Tribeca district. The nonprofit law firm signed a 200,000-square-foot, 30-year commitment at GFP Real Estate’s 16-story 40 Worth St. property. The agreement was one of the biggest leases of the year, along with Equitable Financial Life Insurance Co.’s 130,000-square-foot, 15-year agreement at 1345 Avenue of the Americas back in February.

Tribeca’s 6.5 percent vacancy rate is among the lowest among Manhattan’s submarkets, along with Hudson Square at 6.9 percent. Oppositely, the highest rates registered by mid-2021 were in Soho (15.1 percent), the Plaza District (11.8 percent) and the Financial District (11.7 percent).

Brooklyn’s June vacancy rate climbed to 16.2 percent, up 100 basis points month-over-month, but down 250 basis points year-over-year. Two years ago, the borough’s office vacancy was the lowest in the country, standing at 6.7 percent. There is still a significant gap between Class A and Class B asset vacancies: 22.3 percent versus 5.5 percent—despite the total stock for both asset classes measuring around 16 million square feet.

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