When most people think of New York City, The Big Apple, or The City That Never Sleeps, the image that comes to mind is of Manhattan. Manhattan is home to the most iconic places and landmarks in NYC and has built a reputation as the leading financial, cultural, and entertainment center of the world.
Already the most densely populated borough in New York City, with approximately 1.6 million residents, Manhattan’s daytime population more than doubles during weekdays as commuters flood the city to work in over 500 million square feet of office space. New developments such as Hudson Yards add to the square footage of office space inventory every year, ensuring that companies of all shapes and sizes will continue to have plenty of direct lease, sublease, and flexible lease options to suit their needs.
Manhattan Office Space | Lease Data & Trends
Tenants should expect to pay around $75 per square foot for Manhattan office space, with space in Class A buildings costing closer to $84 per square foot. Office space for lease in Class B buildings is much more affordable, at an average of $58 per square foot. Class A properties are in high demand, primarily due to the appeal of new and renovated office buildings. More than 20 million square feet of new and redeveloped product is currently under construction.
For businesses seeking even lower costs, an office sublease may be the best option. Office subleases are directly with a current office tenant, and may lack the assurances that come with a direct lease through a landlord. However, for businesses that need additional flexibility, lower costs, and want privacy unavailable at a coworking office, subleasing office space is an excellent strategy.
The first two months of 2018 saw an additional $1 billion in commercial real estate sales compared to the beginning of 2017, a good sign for the market to remain strong throughout the year. Q2 2018 saw more than 10 million square feet of leasing activity, a nearly 40 percent increase from Q1 2018.
Recent notable leases include Pfizer’s 792,000 square foot commitment at The Spiral (66 Hudson Boulevard), Discovery Communication’s 362,000 square foot lease at 230 Park Avenue South, a 320,000 expansion by Facebook within 770 Broadway in NoHo, and J. Crew moving into 325,000 square feet at 225 Liberty Street.
Manhattan Office Space for Rent | Popular Neighborhoods
One of Manhattan’s two central business districts, Midtown is composed of multiple submarkets. Over two-thirds of Midtown’s inventory is Class A product with an average rent of $83 per square foot. Nearly every train runs through Midtown, and Pennsylvania Station, Grand Central Station, and Port Authority Bus Terminal are all located in Midtown.
Office space in the Plaza District attracts two-thirds of all NYC hedge funds and is ideal for small to mid-size financial services. The average Class A property is leased at $94 per square foot. Commuters can arrive in the Plaza District via Grand Central Station. Subway lines B, D, F, M, 1, N, Q, and R as well as seven bus lines pass through the area.
Chelsea’s lower average rent of $59 per square foot combined with its abundance of sprawling brick and beam spaces have attracted a variety of big-name tech companies to the neighborhood, including Google, Twitter, YouTube, and Venmo. The presence of Chelsea Market and the High Line provide additional appeal for those working in the area. Penn Station makes Chelsea easily accessible for employees traveling by intercity or commuter rail. Six bus routes and the A, C, E, F, M, 1, 2, and 7 trains also make stops in Chelsea.
Named after the iconic, triangular Flatiron Building, Flatiron has over 21 million square feet of in-demand office space with a low vacancy rate. Floor plans tend to be modest with high ceilings, which attracts companies looking for open office concepts at an average of $65 per square foot. The original center of Silicon Alley, Flatiron is the 6th most walkable neighborhood in NYC and boasts excellent transit options, including 24 bus lines and the F, L, M, N, Q, R, 4, and 5 trains.
The Financial District (FiDi) is defined by the presence of Wall Street, the Federal Reserve, the New York Stock Exchange, and NASDAQ. Considered widely to be the financial center of the world, FiDi offers some of the most affordable office space in Lower Manhattan at rents between $53 and $57 per square foot. Commuters can reach FiDi via the 1, 2, 3, 4, 5, 6, A, C, E, J, Z, R, or W trains, the PATH train, or the East River and Staten Island Ferries.
World Trade Center has over 20 million square feet in inventory with one of the highest vacancy rates (17.3%) in Lower Manhattan. Average office space rents at $81 per square foot and 2017 showed strong leasing trends. Development is still underway, with 2 million square feet still under construction. The World Trade Center Transport Hub provides a connection for the 2, 3, 4, 5, A, C, J, Z, N, R, W, and PATH trains.
Known as a major tourist destination and the center of entertainment in NYC, Times Square is one of the more expensive Manhattan submarkets. Office space is leased for an average of $91 per square foot. Times Square-42nd Street/Port Authority Bus Terminal is the busiest station complex in the system and is served by the 1, 2, 3, 7, A, C, E, N, Q, R, and W trains.
Short for South of Houston Street, SoHo is an upscale, mixed-use neighborhood that boasts over four million square feet of office space for rent. Commercial tenants will pay an average of $77 per square foot (across all building classes) and up to $87 per square foot for Class A properties, due to high demand. The 1, 6, A, C, E, N, R, J, and Z trains pass through the neighborhood, as well as the PATH train.
A hub for advertising, media, and technology, Hudson Square is an up-and-coming business district located within an attractive community. More than 70% of Hudson Square’s inventory is in Class A buildings. The area is sometimes referred to as West SoHo and shares SoHo’s average rents. The 1, A, C, and E trains and M5, M20, and M21 buses serve the area.
Tribeca is a trendy and expensive Manhattan submarket. Short for “Triangle Below Canal Street,” Tribeca is bordered by Canal Street, West Street, Broadway, and Vesey Street. Office space in Tribeca offers a lot of flexibility and open floor space and leases for an average of $87 per square foot. Tribeca is a haven for walkers and bikers, and offers a variety of transportation options via train, bus, PATH, and ferry.
The newest development in Manhattan, Hudson Yards is located between Chelsea and Hell’s Kitchen. Plans for Hudson Yards include 16 skyscrapers with close to six million square feet designated for commercial office space. Office space at Hudson Yards is already in high demand, mainly by the tech sector, and growing at a faster rate than Silicon Alley. Hudson Yards is incredibly easy to reach by train, bus, bike, or ferry.
Conveniently located in the heart of Manhattan, Union Square is a prime location for office space. Class A buildings in Union Square lease at an average of $79 per square foot, with the overall average of Union Square office space much lower at $68 per square foot. The district shares its name with Union Square Park and represents the southern end of Silicon Alley. The 14th Street-Union Square station is located directly below Union Square and is served by the 4, 5, 6, L, N, Q, R, and W trains.
Grand Central Station is a vast commuter terminal served by the 4, 5, 6, 7, and S trains, multiple bus lines, and the Metro-North Railroad. The iconic transit center provides easy access around the city and is located close to the UN Headquarters. Current inventory has a relatively high vacancy rate of 10.9%, and more than 2.5 million square feet are under construction. Office space near Grand Central Station ranges from $67-$70 per square foot.
Getting Around Manhattan
A major asset for companies with Manhattan office space is the abundance of transportation options. Whether by train, bus, commuter rail, or ferry, the majority of residents in and around NYC use public transportation to get to work. Penn Station and Grand Central Station are both located in Manhattan, connecting Manhattan to suburbs and major cities throughout the region and creating a vast hiring pool. There are 151 Subway stations in Manhattan alone, and New Jersey’s PATH system also connects to six stations in Manhattan.
The neighborhoods in Manhattan are all highly walkable, and the city has a growing network of bike lanes and Citi Bike stations.
Manhattan’s traffic and congestion are notorious. According to the annual INRIX Global Traffic Scorecard, New York City is the third most congested city in the world and second in the United States, only behind Los Angeles. The most recent analysis revealed that drivers spend 91 hours per year in traffic and 13 percent of their time sitting in congestion, with 11 percent of that attributed to daytime congestion.
Four of the 10 worst traffic corridors are within the NYC metro area. The eastbound section of the Cross Bronx Expressway (I-95) topped the global list for the third consecutive year. On the 4.7-mile stretch, drivers waste an average of 118 hours per year sitting in traffic. The other corridors that made the list for include E. 34th Street from the FDR Drive to Fifth Avenue, eastbound on the Belt Parkway from exit 3 to exit 17, and E. 42nd Street from the FDR Drive to Seventh Avenue.
In October 2017, NYC’s Independent Budget Office published a report revealing that the city’s decaying subway system costs businesses $864,000 per day in lost work time. Traffic will cost the metro an area an alarming $100 billion over the next five years. Traffic congestion in Manhattan increased by 53 percent since the office’s last study in 2006. Residents in Manhattan and Queens were affected the most by delays, costing commuters more than $1,500 per year.