David Ratner
Oct 1, 2023
The office leasing market in Brooklyn and Manhattan for Q3 2023 exhibited distinct trends
Brooklyn Office Market for Q3, 2023
Decline in Leasing Activity: Brooklyn's office market experienced a 30% drop in leasing activity. The amount of office space leased decreased from 380,751 square feet in the previous quarter to 265,132 square feet in Q3 2023. However, year-over-year, there was a 41% increase in the space leased compared to the same period last year.
Significant Lease Deals: Notable lease deals in Kings County included 72,000 square feet with marketing firm Huge at Dock 72, 27,000 square feet with Highline Commerce in Industry City, and a 19,000-square-foot expansion by the federal General Services Administration at 100 Myrtle Avenue in Downtown Brooklyn.
Rise in Asking Rents: The average asking rent for Brooklyn office space rose 3% to $52 a square foot compared to the last quarter, marking a 7% increase from the previous year. The increase is partly attributed to high-priced new office space entering the market, especially in Williamsburg, Brooklyn’s most expensive office neighborhood.
Availability Rate Trends: Brooklyn's availability rate has improved during the pandemic, in contrast to Manhattan’s worsening situation. The total availability in Brooklyn decreased by 2%, while Manhattan's overall availability increased by 64.6% since March 2020.
Manhattan Office Market for Q3, 2023
Increased Leasing Activity: Manhattan saw a 26.1% increase in office leasing activity, reaching 6.50 million square feet. Significant contributors included Davis Polk & Wardwell’s 710,000 sq. ft. extension and expansion at 450 Lexington Avenue and the City of New York’s 641,000 sq. ft. new lease at 110 William Street.
Leasing Below Average: Despite the increase in demand, the Q3 2023 leasing velocity was below Manhattan’s five-year rolling average. Year-to-date (YTD) 2023 activity was also lower than YTD 2022.
Changing Availability Rates: Manhattan and Midtown South’s availability rates both increased to new record highs, while Midtown’s availability rate remained stable, and Downtown’s tightened since Q2 2023. Sublet availability in Manhattan decreased to its lowest level since January 2023, but it increased by 3.9% year-over-year and grew by 75.1% since March 2020.
Asking Rent Trends: Manhattan’s average asking rent decreased by 0.2% during Q3 2023. Within the three major markets, asking rent was also lower in Midtown South and Downtown, while it increased in Midtown.
These trends highlight the varying dynamics of the office leasing markets in Brooklyn and Manhattan, with each borough showing different responses to the current economic and real estate conditions.
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