Stronger leasing activity was underpinned by the expansionary nature of most large transactions

Manhattan office leasing velocity rebounded after a slow first quarter, totaling 8.7 million square feet (msf) in Q2 2024. Leasing for the first half of 2024 totaled 15.5 msf and increased 8.9% from H1 2023. However, Q2 2024 leasing was still 6.3% shy of the pre-pandemic (2015-2019) Q2 average. Bloomberg's 946,815-square foot renewal at 731 Lexington Avenue was the largest lease of the quarter by a considerable margin and contributed to the stronger total leasing volume. A significant developing theme this quarter was the expansionary nature of most large leases. Of the 25 leases signed this quarter 50,000 sf or greater, 18 of them represented an increase in size, with tenants growing their footprint through a combination of relocations, expansions, and new location openings. Subleasing activity totaled 1.5 msf or 17.7% of total leasing volume, just 10 basis points (bps) higher than its share last quarter. Though leasing showed positive momentum this quarter, office-using employment remains negative year over year and may continue to be a drag on occupancy.

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