August 2023 Newsletter

As the summer comes to a close, many of the trends in the Midtown Manhattan office market have come into clearer focus:

I. Class A Competitiveness

Amidst a sea of available office space, true Class-A midtown buildings are proving their mettle. These well-located buildings featuring updated amenities and quality space maintain their competitive edge as a beacon of stability and a magnet for premium paying tenants.

II. Lease Momentum

On a positive note, the office leasing landscape in August showed signs of promise, with a prime example being RXR's announcement of signed leases exceeding 1 million square feet. Despite challenges, leasing activity has reinforced the tenant demand for well-positioned office space resiliency in the market fueled by an enduring belief in the centrality of office space to an organization’s success.

III. Vacant Space Challenges

While certain properties thrive, vacant space in uncompetitive building continues to face challenges. Whether due to a prohibitive capital stack or stakeholder objections, many of these older buildings continue to resist repricing to match market realities prolonging their irrelevance as office spaces. Adapting to the market demands is essential for these spaces to support a value that is greater than the dirt underneath it.

IV. Back to the Office Push

Since 2020, there has been a consistent rhythm of Labor Day and New Year announcements of “new in-office policies” - and so it continues as employers try to reaffirm their commitment to in-person work experiences. While a consistent 3-day in office work week seems to have gained traction, many are now trying to push for a fourth day. 

As we continue to observe these evolving trends, it's clear that the NYC office landscape is a blend of challenges and opportunities. The triumph of Class-A buildings, the leasing momentum exhibited by RXR, the hurdles faced by vacant spaces, and the ongoing evolution of the hybrid work model all represent NYC’s ability to absorb and adapt to change

Stay tuned for more insights and we look forward to sharing updates as your Midtown office boots on the ground.

Until next month,
Ben