Space jam: NYCs best offices reach capacity leaving tenants on the hunt

More and more, prime Manhattan office buildings are turning on the “No Vacancy” light.While the city’s vacancy rate is still much higher than pre-pandemic levels, the best big blocks in better buildings are being snatched up — some reaching 100% occupancy — so brokers are urging tenants to act fast or be left scrambling.According to Savills, leasing reached a robust 10.5 million square feet in the third quarter — a 20% bump over the previous quarter — bringing the year-to-date total to 32 million square feet, which puts it within reach of 2019’s total leasing of 41.5 million square feet.So far, Colliers has reported 1.85 million square feet leased in the fancy Plaza District, with another 1.05 million square feet at the newer towers at Hudson Yards/Manhattan West.About 77% of all leases have been relocations, and contrary to what work-from-home proponents predicted coming out of COVID, tenants are expanding by 15%.“That’s why we are seeing positive absorption in nine of the last 12 months,” explained David Falk of Newmark, who is tracking 27 million square feet of active tenant requirements — 17% more than in 2019.“There is not enough space to satisfy these needs,” added Bill Elder of RXR, a large office owner.Although trophy space can cost as much as $300 per foot, CBRE found that average asking rents for all types of offices remain flat at $77.45 per foot, while subleases shrank to 3.1% of available space at a lower asking rent of $57.55 per foot.Jason Muss of Muss Development said that conversions to residential and the lease-up of prime space are really changing the narrative: “There is space available, but it is not a situation where there are 10 spaces for every one tenant,” Muss said.Leasing demand is also spilling over from trophy buildings to the broader Class A office market, said Gaby Rosen of RFR Holding.Just look at Park Avenue, where vacancy is so low and rents are so high that deals are now bleeding into both Sixth an...