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The Impact of COVID-19 on the Manhattan Office Market: One Year Later

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Since the end of World War II, the Manhattan office market has faced numerous challenges including the loss of many manufacturing and blue-collar jobs, the 1970s fiscal crisis, the 1970s-1980s subway crisis, the S&L crisis, 9/11, the Great Recession and Superstorm Sandy.

Most recently, COVID-19 has created its own challenges for Manhattan in many measurable ways over the last 12 months. This report will explore what has taken place in Manhattan’s 537 million square foot office market since COVID-19 was declared a pandemic in March 2020. The report will also draw comparisons, where applicable, to the 12-month periods immediately following the 2001 Recession and Great Recession.

Demand

Manhattan leasing volume in 2019 totaled 42.97 million square feet, the strongest year of leasing since 2001. On average, 10.74 million square feet of leasing took place each quarter that year. Leasing volume the following year, however, dropped by 55.9% to 18.97 million square feet, the lowest post-2000 activity on record. Although quarterly leasing volume increased by nearly 10% during Q1 2021 to 4.55 million square feet, it was still 46.1% below Manhattan’s five-year rolling average (8.45 million square feet) and 43.9% below the ten-year average (8.11 million square feet).

 

A 55.9% decrease in year-over-year leasing volume differed greatly from the drop in volume during the 2001 Recession and Great Recession. Leasing activity in 2001 (43.01 million square feet) decreased 14.1% from the prior year. Likewise, 2008’s leasing volume (24.67 million square feet) was only 18.4% below the leasing volume in 2007. Even after continuing to drop the next year, 2009 leasing volume was only 26.9% below 2007.


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The Impact of COVID-19 on the Manhattan Office Market: One Year Later

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