Manhattan Office Vacancy Falls Below 19% as Return-to-Work Patterns Normalise
The most distressed segment of post-pandemic American real estate begins a quiet recovery, led by trophy assets and selective conversions.
The Manhattan office vacancy rate fell to 18.8 percent in the first quarter, the third consecutive quarterly decline and the lowest reading since the second quarter of 2022, according to Cushman & Wakefield.
Trophy assets are leading the recovery. Net effective rents at Class A+ properties in Midtown Manhattan have crossed $130 per square foot, up roughly 14 percent year-on-year.
Office-to-residential conversions remain a meaningful driver of the inventory adjustment. SL Green, Vornado, RXR and Silverstein Properties together have advanced more than 4 million square feet of conversion programmes over the past eighteen months.
The recovery is geographically uneven. Older Class B assets in non-prime Midtown South locations continue to face structural pressure, with several lenders preparing for orderly workouts of properties unlikely to recover viability.
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