New York, July 5, 2017 – Manhattan’s 17.79 MSF of leasing activity at mid-year, 2017 (1H 2017) was up 14.3% since the second half of 2016 (2H 2016) and comparable to the 17.84 MSF from the first half of 2016 (1H 2016), according to Colliers International. Manhattan leasing was 22.2% above the 10-year historical average. The FIRE (financial services, insurance and real estate) sector accounted for the largest share of leasing in all three Manhattan markets (Midtown, Midtown South and Downtown) during 1H 2017 at 38.0% and three out of the top five leases.

Record low unemployment has fueled tenant demand. From May 2016 to May 2017, New York City added approximately 83,000 new private sector jobs, a 2.2% yearly increase and well above the 1.7% annual employment growth nationally and for New York State. At 4.2%, New York City’s unemployment rate (as of May 2017) has been below 5.0% for the last seven consecutive months, the longest such period on record.

Despite recent consternation among some real estate commentators that the market is weakening, especially for lower-profile deals less than 100,000 SF, mid-to-large sized leasing in 1H 2017 (25,000-99,999 SF) totaled 5.29 MSF, on par with the 5.31 MSF in 1H 2016 and ahead of the 4.85 MSF in 1H 2015.

At an average $73.07/ SF, asking rents were stable as against 1H 2016 (0.2% higher) and since year-end 2016 (lower by 0.2%). Pricing was higher Downtown and in seven of Manhattan’s 18 submarkets than 2H 2016.

Manhattan’s availability rate was also steady at 10.1%, down 0.2pp (percentage points) from year-end 2016 and up 0.2pp, year over year. Absorption during 1H 2017 was positive at 0.49 MSF, a reversal from the 2.08 MSF of negative absorption during 2H 2016 and the 1.71 MSF of negative absorption in 1H 2016.

Manhattan remains a target market for investment dollars globally. Year-to-date, there have been 26 sale transactions totaling $7.3 billion, 68.0% of which were to foreign buyers. Notwithstanding a dramatic annual drop off in investment volume by nearly 50.0%, capital values continue to increase.

The average price of a Manhattan office building was up 7.5% to $911.00/ SF. Cap rates remain in the 3.5% to 4.5% range, depending on the asset quality, location and near-term upside. With 25 deals on the market valued at nearly $10 billion, there remains a marked supply/demand imbalance as a limited inventory of assets available for sale does not satisfy the capital seeking quality office product.



1H 2016

2H 2016

1H 2017

Availability Rate




Average Asking Rent ($/SF/YR)




Leasing Activity




Net Absorption




Joseph Harbert, President, Eastern Region for Colliers believes that, “the office market will continue to be strong through 2017. With equilibrium-level availability, tenants have ample opportunities to strike reasonably good deals, especially in Midtown.”


At 8.34 MSF, mid-year leasing in Midtown was 9.0% below the 9.16 MSF of the first six months of 2016, but 6.8% stronger than the 7.81 MSF of 2H 2016. The FIRE sector dominated Midtown leasing in 1H 2017 with a 40% share led by HSBC’s 548,000-SF renewal at 452 Fifth Avenue and a 148,000-SF new lease by Mizuho Securities at 1271 Avenue of the Americas. The mega-deals at 1211 Avenue of the Americas by 21st Century Fox (777,000 SF), Midtown’s largest lease this year, and News Corp. (440,000 SF) brought TAMI (technology, advertising, media, information services) to a 32.0% share.

Midtown asking rents decreased by 1.3% during 1H 2017 to an average $81.40/ SF, 2.0% lower year-over-year. The decrease from the first six months of 2016 to YTD 2017 was primarily due to adjusted asking rents in available large (100,000 SF+) blocks at 605 Third Avenue, 390 Madison Avenue and 575 Fifth Avenue and new inventory with below-average asking rents at 620 Eighth Avenue and 733 Third Avenue.

The YTD 2017 availability rate increased only marginally by 0.1pp to 10.8% over 2H 2016 but was higher than any point in the last three years. Seven separate blocks over 100,000 SF were added to Midtown’s available inventory at 299 Park Avenue (318,000 SF), 620 Eighth Avenue (250,000 SF), 159 East 53rd Street (annex of 601 Lexington Avenue 188,000 SF), 110 East 60th Street (157,000 SF), 520 Madison Avenue (140,000 SF), 733 Third Avenue (132,000 SF) and 245 Park Avenue (117,000 SF). From 1H 2016 to 1H 2017, Midtown’s availability increased by 0.3pp. Absorption for 1H 2017 was negative 0.17 MSF.



1H 2016

2H 2016

1H 2017

Availability Rate




Average Asking Rent ($/SF/YR)




Leasing Activity




Net Absorption





Leasing in Midtown South was flat since 2H 2016, decreasing by less than 1.0% to 5.76 MSF, but transaction volume increased by 5.3%, year-over-year. Just over one-third of all Midtown South deals during the first half of 2017 were by FIRE sector tenants. BlackRock’s lease at 50 Hudson Yards (847,000 SF) was not only Manhattan’s largest this year but the largest lease thus far in the new Hudson Yards/ Manhattan West submarket.

Asking rents in Midtown South dropped to an average $66.32/ SF, down 2.2% since December 2016. Since 1H 2016, asking rents were lower by 0.5%. The small decrease during the first six months of this year was mostly caused by above-average spaces coming off the market at 5 Manhattan West (JPMorgan Chase, 305,000 SF) and One Soho Square (MAC Cosmetics, 87,000 SF) in combination with newly listed, below-average space at 1400 Broadway (108,000 SF) and lower re-pricing at 460 West 34th Street (84,000 SF).

Midtown South’s availability increased by 0.2pp to 8.6% since 2H 2016. Availability is up 1.1pp compared to 1H 2016. New blocks were listed this year at 55 Hudson Yards (144,000 SF), 1400 Broadway (108,000 SF), 132 West 31st Street (104,000 SF) and 10 Hudson Yards (100,000 SF). Absorption YTD 2017 was negative 0.46 MSF.



1H 2016

2H 2016

1H 2017

Availability Rate




Average Asking Rent ($/SF/YR)




Leasing Activity




Net Absorption





Lower Manhattan leasing volume in 1H 2017 was greater than any six-month period in the last three years. Leasing nearly doubled from 2H 2016 to 3.69 MSF, including deals by RBC (403,000 SF) at 200 Vesey Street, Spotify (378,000 SF) at 4 World Trade Center (WTC) and New York State Attorney General’s Office (342,000 SF) at 28 Liberty Street. Leasing increased by 14.8% over 1H 2016.

Downtown’s asking rent average passed the $60.00/ SF threshold for the first time on record to a new all-time high of $63.46/ SF. The 7.5% jump from 2H 2016 was largely due to above-market quoted asking rents at 3WTC (1.80 MSF), the removal of below-average priced space at 17 Battery Place (North and South buildings-267,000 SF) and 375 Pearl Street (194,000 SF), and higher re-pricing at 1 New York Plaza (171,000 SF). Asking rents were up by 9.0% over 1H 2016.

Availability declined by 1.2pp since December 2016 to 11.1% — Downtown’s tightest market since year-end 2008. Strong leasing this year countered new inventory at 55 Water Street (304,000 SF) and 1 Liberty Plaza (222,000 SF). Year-over-year, availability was down by 1.1pp. Net absorption for 1H 2017 was positive 1.12 MSF.



1H 2016

2H 2016

1H 2017

Availability Rate




Average Asking Rent ($/SF/YR)




Leasing Activity




Net Absorption





The average price of a Manhattan office building at mid-year was $911.00/ SF, up nearly 7.5% year-over-year. Midtown Class-A values are up 12.5% year-over-year to $1,228.00/SF, reflecting continued upward momentum for capital values.

Notable transactions during 2Q 2017 included 245 Park Avenue, 85 Broad Street, 619 West 54th Street and a partial interest in One Worldwide Plaza. Looking ahead, there are three pending deals totaling $1.6 billion, including a partial interest in 1515 Broadway and 375 Hudson Street as well as 109-11 West 27th Street.

“Despite a decrease in the velocity of activity, the market continues to see significant capital appreciation. With longer hold periods and less sensitivity to IRRs, cap rates continue to compress as investors both domestic and global have placed a significant premium on Manhattan real estate given the safety, security and capital appreciation it provides against other investment products,” noted Scott Latham, Vice Chairman, Capital Markets.


(Office sales over $10 million)

YTD 2017





Total Sales

$7.3 bil

$22.1 bil

$24.1 bil

$17.4 bil

$25.5 bil

Average Sale Price

$281 mil

$246 mil

$239 mil

$191 mil

$311 mil

Average Price/SF






Additional highlights from Colliers International’s 1H 2017 Manhattan analysis:

  • YTD 2017, Manhattan’s five largest leases were BlackRock’s 847,000-SF relocation to 50 Hudson Yards, 21st Century Fox’s 777,000-SF renewal/expansion at 1211 Avenue of the Americas, HSBC’s 548,000-SF renewal at 452 Fifth Avenue, News Corp’s 444,000-SF renewal at 1211 Avenue of the Americas and RBC’s 403,000-SF renewal at 200 Vesey Street.
  • Two of the top five deals during 1H 2017 were new leases, expansions or renewal/expansions compared to three one year ago.
  • At 3.96 MSF, the Times Square submarket represented more than one-fifth of all Manhattan leasing during the first half of the year, topping the 17 other submarkets.
  • Manhattan sublet availability has remained at or below 2.0% for six consecutive years, a record. The average asking rent for sublet space was up 1.9% since year-end 2016 to $58.76/ SF, 14.9% below the all-time high of $69.04/ SF in 3Q 2008.
  • With strong demand and new construction, Chelsea ($120.21/ SF), Greenwich Village ($116.85/ SF) and Soho ($110.74/ SF) are the only three Manhattan submarkets with Class A average asking rents above $100.00/ SF.

1 Source: New York State Department of Labor

2 Source: New York State Department of Labor. Unemployment data is not seasonally adjusted and no data is listed pre-1976.

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