NYC Market Update: Vacancy Hits All-Year High

As of December, Manhattan’s office vacancy climbed to 12.8 percent, representing an uptick of 120 basis points month-over-month, as well as an increase of 250 basis points year-over-year, according to CommercialEdge data.

The borough’s vacancy rate gradually increased through 2021, from 10.5 percent in January to an all-year high in the last month of the year. The national vacancy rate rose by 130 basis points year-over-year.

During the summer months and September, the borough’s vacancy rate seemed to have plateaued, stagnating at around 10.8 to 10.9 percent. In November, Manhattan lost its dominant position among gateway markets with the lowest vacancy to Boston. The trend continued in December, when Miami also outperformed the NYC borough, with a 12.5 percent vacancy rate.

At the end of 2021, Miami (-260 basis points), Boston (-50 basis points) and Los Angeles (-10 basis points) were the only gateway cities to see vacancy rates decrease year-over-year. Seattle (520 basis points), San Francisco (420 basis points) and Chicago saw the largest gains.

In December, Manhattan listing rates averaged $76.5—representing a 7.2 percent dip on a year-over-year basis and the biggest decrease across all U.S. markets—followed by Seattle (-2.5 percent) and San Francisco (-1.4 percent). Boston (11.6 percent) had the largest positive change in average listing rates among all markets, followed by San Diego (11.2 percent) and Phoenix (9.5 percent).

Despite heightened vacancy all through 2021, landlords chalked up several significant leases in 2021, including:

• Beam Suntory inked a 15-year, nearly 100,000-square-foot lease at SL Green Realty Corp.’s 11 Madison Avenue;
• Madison Square Garden Entertainment Corp. signed up for 428,000 square feet at Vornado Realty Trust’s Penn 2;
• Microsoft committed to 150,000-square-foot at The Bromley Cos.‘s 122 Fifth Ave. in the Flatiron District;
• Tishman Speyer signed a 255,091-square-foot lease with St. Francis College at The Wheeler in downtown Brooklyn;
• Chubb inked 240,000 square feet at The Olayan Group’s 550 Madison Ave.—NYC’s youngest landmark building.

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