Manhattan remains one of the most dynamic office markets in the U.S., with a growing and diversified economy. At the same time, Manhattan’s office market continues to evolve to accommodate new developments and an increase in tenants in the new-media and technology industries.
Some 84,200 office-using jobs were added in 2017, led by 21,500 in professional and business services and 14,800 in financial services. Rejuvenated and emerging submarkets were a magnet for office tenants with a young workforce. Submarkets such as Midtown South and Chelsea are adding firms in the TAMI (technology, advertising, media and information) industries, while some in the bedrock financial sector ponder a shift to Hudson Yards, where more than 10 million square feet are expected to come online over the next few quarters. BlackRock’s relocation from the Plaza District—where vacancy reached 10.2 percent in January—to the Hudson Yards megadevelopment is evidence of the slow exodus and a symbol of the changing office landscape.
Strong demand is producing healthy fundamentals, though rent growth may be sparse going forward in some submarkets, as rents have reached cycle peaks and the first wave of the nearly 20 million square feet that is under construction starts to come online.
Sales of office buildings are declining. Pricing is a concern, and the wave of foreign investors paying top dollar is slowing. The past year saw a little over $9 billion in transactions.