Office space availability in Manhattan is at its highest levels since the Great Recession.
According to Savills, the borough saw 2.5 million square feet of sublease space be added to the market during the third quarter. Now, it accounts for 26.7% of all available space.
“We’re kind of seeing the parallels to what happened during the global financial crisis,” said Danny Mangru, research director for Savill’s’ Tri-State region. “We anticipate by the end of the year it’s going to surpass the global financial crisis peak.”
Additionally, a new report from Newmark Knight Frank believes that an additional 1.1 million square feet will be added to Manhattan’s market over the next few weeks. This increase is expected to come mainly from coworking firms giving back their office spaces.
For instance, Regus recently filed bankruptcy for six of its locations in Manhattan, while Knotel revealed it would be cutting down its portfolio as it faces lawsuits from its landlords over missed rent.
Since the beginning of the pandemic, Manhattan has lost 23 coworking locations equating to 1.2 million square feet. Additionally, office rents have started to drop for the first time since the start of the pandemic, with Midtown South seeing the biggest drop according to Newmark Knight Frank.
Despite the several losses, leasing activity has started to pick up from the previous quarter, with 4.6 million square feet of deals being signed. This marks a 29.6% increase from the second quarter, but a 44% drop from the same time last year.