January 2025 Newsletter

New Year: How's the Market? | 

The Midtown office market is witnessing a significant turning point as the liquidity cycle gains momentum. In 2024, Banks began addressing (and acting on) the weight of defaulted, outdated loans, taking write-downs and finally releasing these assets to the market. This pivotal move is unlocking opportunities for buyers eager to acquire distressed or undervalued properties.

The price discovery and traction from this activity is cracking open the door for lenders to come back, albeit gingerly, to financing office properties.

With new ownership structures emerging, capital stacks are being reset to reflect current market realities - allowing landlords to 'meet the market' on rents and invest the capital to lease stagnant space.

In November 2024, leasing activity totaled 1.49 million square feet, surpassing the five-year monthly average by 38%. Year-to-date, leasing activity reached 14.37 million square feet, marking a 42% increase from the prior year.

On the (space) supply side, we are seeing the catalyst for this surge emanate from banks starting to address their defaulted loans, facilitating property sales, and enabling capital restructuring - leading to vacant space absorption.

On the (tenant) demand side, well, companies want their people in the office!

Until next month,
Ben

Ben Blumenthal
Principal Broker | Noah & Co.

For the rest of our January 2025 Newsletter, click here.