M A R K E T B E AT

MANHATTAN
Office Q4 2019

YoY 12-Mo. ECONOMY: Office-Using Employment Posts an All-Time High

Chg Forecast The New York City economy continued to expand during the fourth quarter of 2019, gaining 22,200 jobs through
11.1% November. The education and healthcare sector added 10,800 jobs during this period, achieving a record-high of
1.1 million jobs. Office-using employment reached an all-time high of 1.47 million jobs, with 6,000 jobs created during the
Vacancy Rate fourth quarter. The unemployment rate fell to 4.0% in November—marking the lowest unemployment rate since 2018.

2.6M SUPPLY AND DEMAND: Leasing Finishes Strong while New Construction Reaches a 33-Year High
The Manhattan office market had a healthy finish to 2019 with fourth quarter new leasing totaling nearly 9.1 million
Net Abs. YTD, SF
square feet (msf)—a 24.7% increase from third quarter activity and only the seventh time in the past 20 years quarterly
leasing exceeded 9.0 msf. The increase in activity was fueled by continued technology expansions, led by Facebook
$73.41 leasing 1.5 msf throughout three Hudson Yards towers and Amazon leasing 338,593 square feet (sf) at
Asking Rent, PSF 460 West 34th Street. Strong quarterly activity brought total new leasing in 2019 to nearly 34.7 msf­—a historical feat
with three consecutive years of leasing greater than 30.0 msf. Renewal activity soared to 2.8 msf in the fourth quarter,
(Overall, All Property Classes) boosted by Morgan Stanley’s 1.2-msf renewal at One New York Plaza. More than 8.7 msf was delivered to the market in
2019, marking the highest level of new construction in 33 years. Nearly 7.7 msf of the new construction was completed
in the fourth quarter, coming to the market 91.1% leased. Overall vacant space increased by 6.8% in the fourth quarter,
largely due to 15 blocks of space each greater than 100,000 sf entering the market, including the delivery of
ECONOMIC INDICATORS
One Manhattan West, 441 Ninth Avenue and 30 Hudson Yards. At 11.2 msf, sublease space reached its highest level in
Q4 2019 10 years, driven by the addition of six sublease blocks totaling nearly 1.2 msf. Overall vacancy ticked up 50 basis points
YoY 12-Mo.
(bps) during the quarter to 11.1% and was up from 9.2 % in 2018.
Chg Forecast
7.2M PRICING: New Construction Drives Penn Station Asking Rents to a Historic High
Manhattan overall asking rents declined $0.50 per square foot (psf) in the fourth quarter to $73.41 but increased from
New York City $72.28 psf one year ago. Midtown Class A asking rents climbed $0.90 to a six-quarter high of $83.12 psf. The increase
Employment was attributed to new construction deliveries at One Manhattan West, 30 Hudson Yards and 441 Ninth Avenue,
bringing Penn Station Class A asking rents to a historic high of $109.40 psf. At $79.78 psf, Midtown South direct
4.0% asking rents fell below $80.00 psf for the first time in 2019 as higher-priced space was leased at 512 West 22nd Street.
Downtown overall asking rents remained steady at $62.70 psf, while Class A asking rents fell $0.80 to $65.90 psf as
New York City lower-priced sublease space entered the market at 225 Liberty Street and One Liberty Plaza.
Unemployment Rate

3.6% SPACE DEMAND / DELIVERIES OVERALL VACANCY & ASKING RENT

U.S. 12,000 $80 16%
Unemployment Rate
10,000
$75 12%
Source: BLS 8,000
Thousands

6,000 $70 8%

4,000
$65 4%
2,000

0 $60 0%
2016 2017 2018 2019 2016 2017 2018 2019

Net Absorptio n, SF Construction Completions, S F Asking Rent, $ PS F Vacancy Rate

M A R K E T B E AT

MANHATTAN
Office Q4 2019

Midtown ASKING RENT COMPARISON

Fourth quarter Midtown new leasing more than doubled quarter-over-quarter to nearly 6.4 msf, bringing
$85
the 2019 total to 20.4 msf­—marking only the third time in 25 years annual leasing exceeded 20.0 msf. The
increase in activity was driven by a significant uptick in Penn Station leasing, which reached an all-time
quarterly high of 2.6 msf—fueled 80.6% by activity occurring in Hudson Yards and Manhattan West new $80

construction.

$ PSF
$75
Even with strong leasing activity, overall Midtown vacancy ticked up 50 bps during the quarter to 11.6%
as nine blocks each greater than 100,000 sf entered the market. Midtown sublease space increased by
$70
13.8% during the quarter to a 10-year high of 7.2 msf—marking the highest level of sublease space on the
market since 2010. Madison/Fifth Avenue was the only Midtown submarket to post a quarterly decline in
$65
sublease space, with vacancy falling 180 bps during the quarter to 16.0% as leasing reached a 33-quarter Q1 15 Q4 15Q1 16 Q4 16Q1 17 Q4 17 Q1 18 Q4 18Q1 19 Q4 19
high at 720,324 sf while limited space was returned to the market. Following a prior three-quarter streak Class A Overall
of negative year-to-date absorption, Midtown ended 2019 with 2.3 msf of positive absorption as five
Midtown buildings were delivered to the market 90.9% occupied.
DIRECT VS. SUBLEASE SPACE AVAILABILITY
Midtown South
Midtown South new leasing registered a three-quarter low of 1.3 msf, with the Dentsu Aegis Network 50
lease for 322,260-sf at 341 Ninth Avenue representing the only fourth quarter transaction greater than
50,000 sf. Overall vacancy climbed 40 bps during the quarter to 8.5%, driven by a 31.4% uptick of Class 40
B sublease space bringing the Class B vacancy rate up 90 bps during the quarter to 9.3%. At 7.7%, Class
A vacancy remained flat during the quarter but declined from the 10.7% rate recorded in the first quarter 30

MSF
of 2019. Madison/Union Square and Hudson Square/West Village were the only two submarkets to post
a quarterly decline in vacancy, with Madison/Union Square falling 30 bps to a four-quarter low of 8.4% 20

and Hudson Square/West Village dipping 40 bps to a 17-quarter low of 6.5%.

10

Downtown
0
Downtown leasing outperformed 2018 by 39.8%, totaling 7.3 msf—marking the highest annual total in 2016 2017 2018 2019
20 years. Although fourth quarter leasing slowed to 1.4 msf, it remained above the long-term quarterly
Direct Sublease
average of 1.2 msf. Financial East leasing increased 87.1% in the fourth quarter, led by Morgan Stanley’s
88,699-sf expansion at One New York Plaza and NYS Office of General Services 56,000-sf expansion at
60 Broad Street. A 221,443-sf blocked added at 225 Liberty Street pushed both the Downtown and World SUBMARKET COMPARISON
Trade Center overall vacancy rates up by 50 bps in the fourth quarter to 11.7%, and 11.9%, respectively. 300
Occupied Vacant

Outlook 250

200
• New leasing activity should remain robust in 2020 but is unlikely to reach the 2019 levels as
150
MSF
employment is expected to grow at a slower pace
100
• Average direct asking rents should continue to increase in 2020, most notably in the Grand
Central submarket where One Vanderbilt Avenue will be delivered to the market 50

• Look for coworking demand to continue to slow 0

Midtown Midtown South Downto wn
M A R K E T B E AT
MANHATTAN Office Q4 2019
MARKET STATISTICS
SUBLET DIRECT OVERALL CURRENT QTR YTD OVERALL YTD LEASING UNDER OVERALL AVG OVERALL AVG
INVENTORY
SUBMARKET VACANT VACANT VACANCY OVERALL NET NET ABSORPTION ACTIVITY CNSTR ASKING RENT ASKING RENT
(SF) (SF) (SF) RATE ABSORPTION (SF) (SF) (SF) (SF) (ALL CLASSES)* (CLASS A)*
East Side/UN 21,280,773 602,699 1,994,489 12.2% -554,022 -863,099 927,900 ­— $73.49 $74.31
Grand Central 44,065,875 950,889 4,808,844 13.1% -278,512 91,536 3,448,823 1,732,955 $73.29 $76.70
Madison/Fifth 23,776,127 589,833 3,221,274 16.0% 135,829 -742,210 1,719,617 ­— $89.66 $94.55
Murray Hill 14,142,543 387,436 1,052,502 10.2% 77,617 -229,743 1,153,886 ­— $60.40 $64.92
Park Avenue 21,350,326 665,704 1,688,329 11.0% -131,985 -704,491 1,187,127 657,700 $97.35 $97.35
Penn Station 22,690,661 604,010 1,279,751 8.3% 5,360,472 4,909,752 5,171,347 8,403,439 $95.50 $109.40
Sixth Avenue/Rock Center 41,816,982 979,923 2,663,037 8.7% 1,474,648 1,530,373 2,481,192 84,000 $79.98 $80.85
Times Square South 30,640,388 1,137,920 2,333,303 11.3% 38,357 -976,117 2,245,100 ­— $55.77 $68.62
West Side 30,981,301 1,254,233 2,821,356 13.2% -187,112 -705,797 2,104,762 — $71.48 $72.60
MIDTOWN TOTALS 250,744,976 7,172,647 21,862,885 11.6% 5,935,292 2,310,204 20,439,754 10,878,094 $76.80 $83.12
Chelsea 17,015,779 533,387 1,055,715 9.3% -320,763 -295,676 1,529,094 390,053 $71.19 $93.22
Greenwich/NoHo 4,820,157 96,913 203,702 6.2% -21,111 -164,494 167,472 212,609 $69.59 $49.00
Hudson Square/West Village 10,090,675 307,191 345,472 6.5% 54,457 717,752 2,680,733 1,300,000 $91.02 $114.51
Madison/Union Square 32,285,858 676,616 2,046,716 8.4% 66,086 -417,859 2,158,760 452,000 $73.78 $85.27
SoHo 4,139,332 177,623 364,470 13.1% -14,206 -44,089 388,197 — $86.50 $115.32
MIDTOWN SOUTH TOTALS 68,351,801 1,791,730 4,016,075** 8.5% -235,537 -204,366 6,924,256 2,354,662** $75.73 $94.00
City Hall 7,690,533 64,874 616,124 8.9% 4,465 -468,063 190,957 — $61.36 $47.32
Financial East 33,823,294 675,307 3,678,351 12.9% -501,271 -92,211 2,743,515 48,077 $58.63 $61.25
Financial West 6,017,928 100,971 1,098,352 19.9% 132,427 -45,545 550,519 185,295 $58.87 $55.38
Insurance 13,000,604 199,325 1,000,670 9.2% 35,464 240,342 1,066,716 51,755  $59.29 $67.19
TriBeCa 5,124,468 49,645 106,130 3.0% 72,162 42,718 193,492 ­— $71.24 $71.71
World Trade 24,103,907 1,099,864 1,774,958 11.9% -72,479 772,685 2,566,916 40,504 $71.55 $71.59
DOWNTOWN TOTALS 89,760,734 2,189,986 8,274,585 11.7% -329,232 449,926 7,312,115** 325,631 $62.70 $65.90
MANHATTAN TOTALS 408,857,511 11,154,363 34,153,545 11.1% 5,370,523 2,555,764 34,676,125 13,558,387 $73.41 $79.82
*Rental rates reflect full service asking ** Not reflective of U.S. Tables

KEY LEASE TRANSACTIONS Q4 2019

PROPERTY SUBMARKET TENANT SF TYPE
One New York Plaza Financial East Morgan Stanley 1,253,589 Renewal/Expansion*
50 Hudson Yards Penn Station Facebook 1,159,313 New Lease
60 Broad Street Financial East NYS Office of General Services 523,000 Renewal/Expansion*
*Renewal portion not included in leasing statistics

KEY SALES TRANSACTIONS Q4 2019

PROPERTY SUBMARKET SELLER / BUYER SF PRICE / $ PSF
220 East 42nd Street Grand Central The Chetrit Group/SL Green 1,139,860 $815M/$715
100 Pearl Street Financial East GFP Real Estate/Northwind Group 970,000 $310M/$320
685 Third Avenue Grand Central BentallGreenOak/Unizo Holdings 639,000 $451M/$706

COMPLETED CONSTRUCTION 2019

PROPERTY SUBMARKET MAJOR TENANT SF OWNER/DEVELOPER
30 Hudson Yards Penn Station WarnerMedia/Wells Fargo/KKR/Facebook 2,600,000 Related Companies/Oxford Properties
One Manhattan West Penn Station Skadden, Arps, Slate, Meagher & Flom/EY/Accenture/NHL 2,077,557 Brookfield/Qatar Investment Authority
1271 Avenue of the Americas Sixth Avenue/Rock Center Latham & Watkins/AIG/Mizuho Americas/MLB 2,000,000 Rockefeller Group
M A R K E T B E AT

MANHATTAN
Office Q4 2019

OFFICE SUBMARKETS

RICHARD PERSICHETTI
Vice President
Tri-State Region Research Lead
[email protected]

LORI ALBERT
Research Director
[email protected]

1290 Avenue of the Americas

New York, NY 10104
+1 212 841 7500

A CUSHMAN & WAKEFIELD

RESEARCH PUBLICATION
Cushman & Wakefield (NYSE: CWK) is a leading global real
estate services firm that delivers exceptional value for real
estate occupiers and owners. Cushman & Wakefield is among
the largest real estate services firms with approximately
51,000 employees in 400 offices and 70 countries. In 2018, the
firm had revenue of $8.2 billion across core services of
property, facilities and project management, leasing, capital
markets, valuation and other services.

©2020 Cushman & Wakefield. All rights reserved. The information

contained within this report is gathered from multiple sources believed
to be reliable. The information may contain errors or omissions and is
presented without any warranty or representations as to its accuracy.

cushmanwakefield.com