SUMMARY OF THE COMMERCIAL OFFICE MARKET-Q1 2023
THE NEW YORK CITY ECONOMY IS IMPROVING
In March 2023, the hotel occupancy rate was 82.7%. In April 2020, the occupancy rate was 32%. The daily ridership in March 2023 was 3,259,000. Subway ridership was 391,000 per day in March 2020. The current rate of unemployment is 5.4%. The unemployment rate in NYC in April 2020 was 21.4%.
OVERALL MARKET
In New York City, the market has stabilized. For the last two years, the availability rate in Manhattan has changed by 60 basis points. Today’s availability rate is 17.8%. For the past two years, rent fluctuated by one dollar. In New York City, the average monthly rent is $53.98.
VACANT VERSUS AVAILABLE
Over the past two years, the available space has been consistent. There are 104,933,000 rsf available now. There were 104,700,000 available in the third quarter of 2021. The definition of available is the sum of vacant space that is immediately available and already being marketed because a tenant occupies it. However, Vacancy is still increasing. Currently, 73,575,000 rsf is vacant, compared to 61,664,000 rsf in Q3 2021
DIRECT SPACE VERSUS SUBLET MARKET
In contrast, to sublet space, which is growing, direct space is shrinking.
Direct space is 80,294,835 rsf today compared to 82,729,487 rsf in the third quarter of 2021. Today, there are 24,749,246 rsf of sublet space, compared to 22,076,378 rsf in Q3 2021. Please note that the amount of sublet space is at its highest level since the start of the pandemic.
LEASING ACTIVITY YEAR BY YEAR
Every year since the beginning of the pandemic, leasing activity has been more than the previous year. 24,447,353 RSF were leased in 2020. 31,943,786 SF in 2021. Finally, in 2022, 36,605,568 SF were leased.
SUMMARY
The overall economy is improving. The commercial real estate market remains steady. However, it would be more challenging for landlords to lease space due to the rise in sublet space and vacant space. As a result, landlords will need to be more flexible on the term, the right to cancel the lease, give new installation, and provide furniture.
