Class A office product dominated Manhattan in the last quarter of 2017, as detailed in the Q4 2017 Office Insight report recently released by JLL Research. This “flight-to-quality” theme was reflected in Midtown lease signings at newly constructed or renovated offices like EY’s relocation to 1 Manhattan West (604,295 s.f.), Bank of America’s expansion at 1100 Avenue of the Americas (386,000 s.f.) and Ann Inc.’s renewal at 7 Times Square (300,000 s.f.). Downtown also experienced Class A office outperformance, with the market’s Class A vacancy increasing only 30 basis points year over year despite the 1.7 million s.f. of available space added by 3 World Trade Center.
Promising employment fundamentals coupled with new supply additions are likely to sustain the Manhattan office market for the near future: Landlords will need to perform property upgrades and offer compelling concessions to stay competitive in 2018.