Top-of-market leasing demand shows strength as Omicron impacts wane

As New York City slowly bounces back from Omicron-driven restrictions seen in early-2022, the local economy in general, and the office market in particular, are growing again. Physical office occupancy reached 37.2% in March 2022 (according to Kastle Systems badge swipe data), a new post-COVID peak, while public transit ridership is back to early December 2021 levels. The gradual uptick in business and social activity translated to healthy first-quarter office leasing activity in Manhattan. Leasing totaled 7.7 million square feet (msf) in Q1 2022, a 90% increase from one year ago and above the five-year first-quarter average of 6.5 msf. High-end redevelopments are proving to be a preferred option for some of the market’s top tenants, highlighted by IBM’s 328,000-sf lease to anchor One Madison Avenue and Hermès’ 71,757-sf relocation to 550 Madison Avenue. A flurry of smaller leases were also signed at prestigious One Vanderbilt, bringing that building closer to 100% occupancy.

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