NYC Offices Empty Again Just as Demand, Rents Begin to Recover

(Bloomberg) -- Manhattan's office market has seen a rebound in demand, but the surge in Covid-19's omicron variant could delay further progress. 

Leasing jumped to 9.3 million square feet (864,000 square meters) in the fourth quarter, the most in two years and up 21% from the previous quarter, according to a report Monday by Savills Research. Much of the demand was driven by new agreements, a sign that tenants are committing to long-term plans for offices in the future, the brokerage said. 

Still, the supply continues to rise as new blocks of space in towers such as 60 Wall Street and 2 Manhattan West reach the market. Companies including top banks and technology firms are reassessing policies to bring workers back amid record Covid-19 cases. 

“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,” Savills said in the report.

Average asking rents inched up for the first time in two years, rising 1.3% from the third quarter to $76.03 a square foot, as more premium spaces became available. Rents remain 9.4% below pre-pandemic levels. 

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