Manhattan’s Meh July
Commercial Observer
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How challenging is Manhattan’s office market right now? A single lease accounted for more than a quarter of its leasing volume in July. That’s from a new report that paints a picture of a market still struggling back from the ill effects of the pandemic. Speaking of challenging, brokerage giant Cushman & Wakefield lost tens of millions last quarter due to the lackluster office and capital markets.
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— Tom Acitelli, Deputy Editor
Manhattan Office Leasing Improves in July, But Not Enough to Save 2023
Manhattan’s office market had its best month of the year in July, but overall leasing remains extremely lackluster compared to pre-pandemic metrics, according to Colliers’ July market report. Office leasing activity grew by more than 20 percent last month, to 2.3 million square feet. However, with so few traditional office tenants looking for space, more than a quarter of the monthly leasing volume came from a single lease: a city agency taking 640,744 square feet at 110 William Street in the Financial District. Not surprisingly, the Financial District had its strongest month of leasing since December 2019, but 70 percent of the square footage leased came from the 110 William deal. Midtown, meanwhile, had no such luck, with leasing volume falling 20 percent since June and more than 50 percent year-over-year, according to the report. The largest lease in the area was again a government deal, Empire State Development at 655 Third Avenue. “Even though the activity for Manhattan overall was the highest since January, we are still in a place where demand will need to continue to increase throughout the year if there’s any chance of leasing activity exceeding 2022,” said Franklin Wallach, the executive managing director for research at Colliers.
Cushman & Wakefield Looks to Make Up for $71M in Losses From Ailing Office Market
Cushman & Wakefield is scouring its operation for savings after a rough six months, having identified where it can sock away $130 million by the end of the year as it faces revenue losses thanks to the country’s struggling leasing and capital markets sectors. C&W saw an overall revenue decrease of 6 percent year-over-year after pulling in $4.7 billion in the first half of 2023, and its net losses amounted to around $71.3 million, company officials announced during C&W's latest quarterly earnings call. Earnings before interest, taxes and depreciation at the brokerage decreased by 57 percent from the first half of 2022 to $207 million. “We’ll be taking more intentional and holistic approaches to capital allocation as it relates to our updated strategy across all of our businesses with the knowledge that investment capital allocation to our business lines is not free and we must evaluate returns accordingly,” C&W CEO Michelle MacKay said during the call.
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