Marcus & Millichap

New York City Local Office Report

Second Quarter 2019

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Largest Pipeline in a Decade to Test Tight Office Market in the Big Apple

Dynamic economy generating robust demand. Amid steady job growth in the New York City metro, office-using firms have been rapidly leasing new office space. Net absorption registered more than 4.4 million square feet in 2018, the highest pace since the high-water mark reached in 2014. When combined with a muted pipeline that has crossed 4 million square feet just twice in the past five years, vacancy has remained subdued, resting consistently below 12 percent since 2012. These factors have contributed to the largest office construction pipeline in over a decade, with more than 14.7 million square feet of space expected to be delivered before year’s end. As a result, rent gains have proved more marginal than previous years, barely outpacing the rate of inflation in most boroughs as owners opt to lock up longer leases on more tenant-friendly terms to avoid potential upswings in vacancy.

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