NYC offices empty again just as demand, rents begin to recover

Manhattan’s office market has seen a rebound in demand, but the surge in COVID-19’s omicron variant could delay further progress.

Leasing jumped to 9.3 million square feet (864,000 square meters) in the fourth quarter, the most in two years and up 21 percent from the previous quarter, according to a report Monday by Savills Research.

Much of the demand was driven by new agreements, a sign that tenants are committing to long-term plans for offices in the future, the brokerage said.

Still, the supply continues to rise as new blocks of space in towers such as 60 Wall Street and 2 Manhattan West reach the market. Companies including top banks and technology firms are reassessing policies to bring workers back amid record COVID-19 cases.

“The new omicron variant presents an additional layer of uncertainty going forward as occupancy has pulled back slightly in recent weeks and companies mull postponing return-to-office plans,” Savills said in the report.

Average asking rents inched up for the first time in two years, rising 1.3 percent from the third quarter to $76.03 a square foot, as more premium spaces became available. Rents remain 9.4 percent below pre-pandemic levels.

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