The availability rate of office space in Midtown Manhattan in the second quarter of 2023 was significantly different across submarkets. While an availability rate of 17.7 percent was reported in Grand Central, only 3.8 percent of office space was available in U.N. Plaza.

The availability rate of offices in Manhattan rose in all districts between the fourth quarter of 2022 and the fourth quarter of 2023. The average availability rate was 17.9 percent in 2023. The Midtown district had the lowest availability rate in that quarter, at 15.9 percent. Conversely, Downtown Manhattan had the highest share of available offices, at 20.9 percent.

The availability rate of office space in Downtown Manhattan in the fourth quarter of 2023 varied across submarkets. The Financial District had the highest availability rate of 26.8 percent while City Hall had the lowest availability rate of 12 percent.

The amount of office space in Midtown Manhattan amounted to 241.3 million square feet in the first quarter of 2024. This was the largest district in terms of office inventory, followed by Midtown South and Downtown Manhattan. Importance of New York for office spaceManhattan is the most famous borough of New York City, and is home to the headquarters of many international organizations as well as multinational corporations, such as the United Nations, Citi and Pfizer. The borough is also located on an island in the middle of the city, which means that the volume of space is limited in supply and that real estate is in high demand there. Asking rents in the borough are, consequently, very high. Availability of office spaceThe availability rate of office space in Manhattan varies between the districts, but is almost 17 percent on average. This means that roughly 17 percent of total rentable space is available.

The average asking rent for Class A office space in Midtown Manhattan was 82.74 U.S. dollars per square foot in the first quarter of 2024. It was above the Manhattan average of 80.38 U.S. dollars, but below that of Midtown South, which was the most expensive district at 103.42 U.S. dollars per square foot. What is Class A real estate?Class A real estate refers to the best properties in terms of appearance, age, quality of infrastructure and location. These properties usually command the highest rental rates, due to their high quality. In the U.S., Manhattan has the most expensive rents for Class A offices.Midtown vs Midtown SouthMidtown Manhattan contains the Empire State Building, MoMA, Grand Central Station, and the United Nations Headquarters. The most expensive submarket there was Plaza District in 2024. Meanwhile, Midtown South is home to Madison Square Garden, Pennsylvania Station, Hudson Yards, and Koreatown. In 2024, the most expensive submarket there was Hudson Yards, followed by Chelsea and Hudson Square.

The average asking rent for office space in Midtown Manhattan in the fourth quarter of 2023 was highest in the Plaza District. The square foot of space cost 93.3 U.S. dollars to rent in that quarter. The cheapest submarket to rent office space was Columbus Circle, where a square foot cost 68.32 U.S. dollars. Times Square was the only district where the average rent rose between the fourth quarter of 2022 and the fourth quarter of 2023.

The average Class B asking rent for office real estate in Manhattan in the fourth quarter of 2023 was 67.81 U.S. dollars per square foot. The district that reported the highest average Class B rent was Midtown South, where a square foot of space cost 74.02 U.S. dollars. Between the fourth quarter of 2022 and the fourth quarter of 2023, rents in Midtown South increased, while in Midtown and Downtown, they declined.

The average Class B asking rent for office real estate in Midtown, Manhattan in the fourth quarter of 2023 varied by submarket. Columbus circle had the highest average Class B rent of 70.13 U.S. dollars per square foot, while Times Square had the lowest rate of 52.93 U.S. dollars per square foot. The average class B asking rent in Midtown was 59.83 U.S. dollars in that quarter.

In Texas, Austin was the most expensive market for office space in the second quarter of 2024. The rental rate of class A offices was nearly 52 U.S. dollars per square foot, compared to 26 U.S. dollars per square foot for El Paso. Dallas, which is the largest office real estate market in the state, had rental rates of about 30.3 U.S. dollars for all classes and 35.7 U.S. dollars for class A offices. In the United States, Manhattan, San Francisco, and Silicon Valley-South Bay fetch the highest office rental rates.

Between 2022 and 2023, the Insurance District was the only submarket in Downtown Manhattan where the average office rent increased. The average asking rent for office space in Downtown Manhattan was the highest in Tribeca where a square foot of space cost 74.21 U.S. dollars to rent in the 4th quarter of 2023. The cheapest submarket to rent office space was City Hall with 50.31 U.S. dollars rent per square foot.

Among the 25 markets with the largest class A office real estate inventory in the United States, eight experienced positive absorption rates during the fourth quarter of 2023. Dallas-Fort Worth, had the highest absorption rate at almost 829,000 square feet, meaning that the amount of space physically occupied was 829,000 square meters more than the amount of space vacated. Manhattan, the largest U.S. office market, had the second-highest absorption rate. Despite a difficult 2022, the demand in the office sector is forecast to pick up, with net absorption increasing until 2027.

Rental rates in the United States increased steadily since 2008. In 2023, the producer price index for gross rent in office buildings reached ***** index points. This means that between 2008 when the index value was set to 100 and 2023, gross office rents grew by about ** percent. Manhattan, San Francisco, and Boston are among the biggest and most expensive markets for office space in the United States.

Manhattan, NY, was the market where renting an office was most expensive in the United States in 2023. The average annual quoted square footage rent of office space was close to ** U.S. dollars in the fourth quarter of the year. Only one other market - East Bay - came close to this rental rate. In Washington D.C., the market with the second-largest inventory of class A downtown offices, the annual rent amounted to approximately ** U.S. dollars per square foot. Since the onset of the coronavirus pandemic, the office real estate sector has been suffering an increase in office vacancies, affecting both downtown and suburban properties.

Home of the New York Stock Exchange, Times Square, the Theater District, and countless other landmarks, Manhattan is undoubtedly among the most expensive commercial real estate markets in the United States. On 5th Ave (49th St. - 59th St.), the annual asking rent of retail space reached 2,750 U.S. dollars per square foot in the first half of 2023. Broadway & 7th Ave (42nd St. - 47th St.) had the second highest rent among Manhattan corridors, with a median asking rent of 980 U.S. dollars.

New York had one of the highest construction costs for prime offices in the United States, at over 660 U.S. dollars per square foot on average. In addition to the 541-meter One World Trade Center building, New York City also has some of the tallest skyscrapers in the United States. What element affect construction costs? Location and topography have a big impact on construction costs, for example, earthquake-prone zones have more stringent building requirements which will affect cost of materials, supplies, and labor. Increased interest in sustainability has also prompted sustainable certification across the country, most noticeably as LEED-registered offices. Slow growth of the office construction segmentThe value of new private office construction in the U.S. has kept rising in the past years, but at a slower rate than before 2019. The changes in the way people work, with part of the workforce working from home at least part of their week might have hindered investment in office real estate.

Annual office occupancy costs in the Americas were highest in Manhattan in New York City where they reached over 169 U.S. dollars per square foot in the second quarter of 2021. Occupancy costs include service charges and taxes, and are also known as gross rents in the United States. In the same period, office occupancy costs amounted to 23.59 U.S. dollars per square foot per year in Rio De Janerio, Brazil which was the lowest recorded in the range in this category.