Demand reaches its highest quarterly total in two years, Omicron impact remains unknown

New York’s office market gained significant steam in the fourth quarter as leasing activity surged to its highest level since the start of the COVID-19 pandemic. Demand totaled 9.3 million square feet (msf) for the quarter, up 20.8% from the third quarter and higher than the pre-pandemic fourth quarter average of 9.0 msf. New locations and relocations accounted for 74% of total leasing activity, another sign that tenants are finalizing long-term plans for office use and committing to significant amounts of space for the future. Physical office occupancy increased steadily after Labor Day, and peaked at 37% on December 1, per data from Kastle Systems. However, 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.

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