New York Office
Outlook - Q4 2019
Tech overtakes finance as the most active office leasing industry in Manhattan for the first time
Expansions by Google, Facebook, Uber and other tech companies allowed new construction and renovation market fundamentals to strengthen appreciably throughout Manhattan. Tech became the top office leasing industry segment in 2019, demonstrating the market’s continued diversification.
Total leasing activity remained healthy at 29.5 million square feet and was increasingly concentrated on high quality properties. The Class A market segment captured 84.9 percent of closed deals in 2019, representing a record proportionate share. Several Class B vacancies were introduced in Midtown, incrementally lowering its overall asking rents and increasing its vacancy rates in the fourth quarter.
Investment activity totaling $9.6 billion in the fourth quarter was strong by recent historical standards. Investors were predominantly focused on high-yielding office acquisition opportunities in 2019, though additional core, stabilized transactions are likely forthcoming in 2020.