New York City is a premium gateway into the United States’ business world, so it’s no surprise that the rental market is plentiful and dynamic. Prices tend to be high and vacancy rates low in the American business capital with little change expected in 2020 and beyond. Increasing demand for coworking spaces may provide more opportunities for small and medium-sized businesses.
Up to 2019
According to Optimal Spaces office space vacancy rates at the end of 2019 were 9% in Midtown South, 11.5% in Midtown and 11.8% in Lower Manhattan. These statistics refer to the borough of Manhattan, which is where most of the office space is available. Despite the relatively low vacancy rates, there are plenty of office spaces available due to the size of the market in New York. Rental prices are some of the highest in the world reflecting the demand for prime office real estate in the city.
A report by Property Shark notes there has been a rise in demand for office spaces suited to coworking, leading to a rise in rent prices, with the associated effect of driving down vacancy rates. Although the current Coronavirus outbreak appears to be reducing the leasing volume, Manhattan office prices are at an all-time high as of February 2020.
Beyond 2020
Despite increasing demand, Knight Frank predicts a vacancy rate of 7.7% , up 0.5% from their 2018 forecast. Several new office spaces were set for completion at the end of 2019, adding almost 2.7 million square foot of office space. With increasing demand for coworking spaces, more office space developments are expected for 2020 and 2021.
In conclusion
New York City is one of the most fast-changing office space rental markets in the world. Vacancy rates and rental prices can fluctuate and are sensitive to the changes in the world economy. Despite this, there are still abundant opportunities for office space rental, although the high asking rates can be off-putting for smaller and medium-sized businesses unless they are willing to lease coworking spaces.
