Q3 2024 LOWER MANHATTAN REAL ESTATE MARKET REPORT
LOWER MANHATTAN REAL ESTATE MARKET REPORT
Lower Manhattan’s office market rebounded from the second quarter, recording the district’s second highest quarterly leasing total since 2022. Leasing was driven by a diverse set of nonprofit tenants while several prominent technology and professional services firms also expanded their presence downtown. Net absorption remained positive for the third straight quarter, indicating that the office market is continuing to adjust to new demand profiles. Office owners continued to take advantage of Lower Manhattan’s strong residential market to convert older office stock to housing with two new projects containing 1,100 new units announced in Q3. The district’s hospitality sector continued to perform well with both room rates and occupancy staying at or near record levels. Nineteen new retailers opened as businesses continue responding to the neighborhood’s growing residential population and increased foot traffic.
Lower Manhattan Q3 Leasing Grows Significantly, Sees Third Straight Quarter of Positive Absorption
Lower Manhattan enjoyed an improvement in office leasing for the second straight quarter, ending Q3 at 682,000 sq. ft. leased. The total represents a 16% quarter over quarter increase as well as a 10% growth year over year. This past quarter marks the second highest leasing total since 2022. Furthermore, Lower Manhattan experienced the only positive quarter over quarter growth among the three Manhattan submarkets. The district’s office market experienced 709,000 sq. ft. of positive net absorption, according to CBRE, largely driven by office-to-residential conversion projects that have taken large swaths of office space off the market. This marks the third straight quarter of positive net absorption.
Two major leases buoyed downtown leasing: StubHub’s
Lower Manhattan Annual New Leasing Activity, 2017-2024
Source: CBRE
682,000 Square Feet Of New Leasing In The Third Quarter
103,188 sq. ft. lease at 4 World Trade Center and Catholic Charities of the Archdiocese of New York’s 77,130 sq. ft. deal at 80 Maiden Ln. The two deals accounted for a large chunk of activity (26%) as deal volume has increasingly come from smaller leases under 25,000 sq. ft.
Nonprofits Spearhead Third Quarter Leasing
The nonprofit sector, long an anchor of Lower Manhattan’s office market, led all industries with a 27% share of activity. The primary contributors were Catholic Charities of the Archdiocese of New York’s 77,130 sq. ft. deal at 80 Maiden Ln., Legal Aid Society’s 39,971 sq. ft. sublease at 55 Water St., and Uncommon Schools, Inc’s 28,901 sq. ft. lease at 100 Church St. Media and Entertainment placed second, making up 19% of leasing activity. The companies involved include the aforementioned 103,188 sq. ft. StubHub lease at 4 World Trade Center and the 41,854 sq. ft. Orchestra lease — a marketing and PR firm — at 195 Broadway. Law firms had the third largest share of leasing, with Freshfields Bruckhaus Deringer LLP’s 44,931 sq. ft. sublease at 3 World Trade Center and Hawkins, Delafield & Wood’s 26,206 sq. ft. lease at 140 Broadway.
Lower Manhattan Sees Modest Vacancy
Declines While Midtown South Hits Record High
Commercial office vacancy rates have remained stubbornly high across the city since the onset of the pandemic. Approximately one quarter of Manhattan’s office space is currently unoccupied, and record-breaking rates remain common.
Lower Manhattan’s overall vacancy rate declined modestly for the second straight quarter, finishing Q3 at 24.4%. Midtown South has surpassed downtown as the highest vacancy district, and broke the central business district (CBD) record for the second straight quarter — posting a rate of 26.3%. The Midtown South market also experienced a dramatic year over year change of 3.9%. Meanwhile, Midtown rates have fared the best over the past two years, and finished Q3 with a 22.3% vacancy rate, down very slightly from Q2.
The Class A market paralleled the overall vacancy market in Q3, as the Lower Manhattan rate stayed relatively flat at 23.8% and Midtown South shot up to 25.9%, a Class A record. Midtown’s Class A rate fell by almost a full percentage point over the quarter, ending Q3 at 21.3%.
Class A Vacancy Rates by Submarket
Source: Cushman & Wakefield
Overall Vacancy Rates by Submarket
Source:
Cushman & Wakefield
Lower Manhattan Overall and Class A Asking Rents Fall, Midtown Rates Continue to Rebound
Overall office asking rents continued to fall in the downtown market, hitting an average of $55.39 per sq. ft. This figure has been in decline since 2021, even in the face of shrinking office supply coming mostly from conversion projects. The neighborhood’s Class A rents have also faltered amid the dip in demand, sinking to $58.71 per sq. ft. — a year over year decrease of 1.6% and a quarterly dip of 0.7%.
Overall asking rents in Midtown and Midtown South, on the other hand, have returned to pre-pandemic highs. Rents in Midtown and Midtown South increased by 2% and 3.4%, respectively, and currently hover at the $78 per sq. ft. mark in both submarkets. Additionally, these markets’ rent values have remained stable for the past year — a particularly unusual trend for Midtown South, which has experienced notable year over year volatility for the past decade. Class A office rents also increased over the quarter and year for the two submarkets, with the Midtown South value spiking up by 5.6% on an annual basis and 1.9% on a quarterly basis.
First Quarter Property Sales
Office Building Sales:
• 180 Maiden Ln.: 99c, a company started by Canadian biotech entrepreneur Carlo Bellini, recently acquired 180 Maiden Ln. for $297 million.
• 100 Wall St.: BLDG Management Co. Inc. and David Werner Real Estate Investment acquired 100 Wall St. Northwind Group provided a $95 million senior mortgage acquisition loan secured by the 515,000 sq. ft, 29-story office property.
• 80 Pine St.: Bushburg successfully purchased Rudin’s 80 Pine St. for $160 million. To finance this acquisition, they secured a $100 million loan from Carlo Bellini’s 99c. The building is being considered for conversion.
• 77 Water St.: The Vanbarton Group has agreed to purchase Sage’s 77 Water St. for approximately $95 million. They intend to convert the 26-story office building into up to 600 residential units. This deal is anticipated to be finalized by the end of the year.
Residential:
• 17 John St.: Vanbarton Group sold 17 John St. to a
Source: Cushman & Wakefield Class A
Asking Rents by Submarket
Source: Cushman & Wakefield
private entity for $64 million.
Mixed-Use Building Sales:
• 20 Exchange Place: DTH Capital sold 20 Exchange Pl. for $370 million to the Dermot Co., a developer with a growing presence in New York. The new owners plan to make renovations to remain competitive with other conversion projects in the market.
Hotel:
• 102 Greenwich St.: The property was recently acquired and used to be a five-story dorm for King’s College. It reopened in August as Tribeca Hotel FiDi and contains 50 rooms.
Education:
• 154 Nassau St.: Pace University acquired $140.4 million to refinance its university building at 154 Nassau St. in the Financial District. The financing came from the Dormitory Authority of the State of New York. The property spans 527,000 sq. ft.
Defaults:
• 17 State St.: RFR Holding’s $180 million commercial mortgage-backed securities loan tied to 17 State St. has been sent to its special servicer after RFR failed to pay back its debt in August.
Leading Architecture Firm Studio Gang is Latest Addition to Lower Manhattan’s Growing List of Cutting Edge Design Companies
Lower Manhattan’s impressive roster of architecture and design firms has continued to grow with the addition late last year of award winning women-owned architecture firm Studio Gang. Known for its cutting edge design, sustainability and urban planning practices, Studio Gang signed a 12,000 sq. ft. lease at 120 Broadway.
Over one hundred architecture and design firms currently operate within Lower Manhattan. Lower Manhattan firms include industry leaders such as Skidmore, Owings and Merril (SOM), which designed One World Trade Center, Shop Architects, known for its design of Barclays Center, and the recently completed Brooklyn Tower and Woods Bagot – another leading design firm. Snohetta, located at 80 Pine St., is a global transdisciplinary practice that along with architecture and landscape architecture offers graphic, digital, and product design services. The firm is particularly special to Lower Manhattan as it spearheaded the design of the September 11 Memorial Museum Pavilion. Lower Manhattan’s cutting edge is not exclusive to starchitecture, though. Thornton Thomasetti, an engineering, construction, and design firm, occupies 102,440 sq. ft. of office space at 120 Broadway. The organization specializes in structural and facade engineering with a focus on sustainable design.
RETAIL
Nineteen retailers opened in the third quarter. Seventeen of them were food and beverage businesses, including:
• Regular NYC, a casual dining restaurant serving specialty coffee, breakfast and lunch, opened at 19 Rector St.
• Vineyard, a Deli chain, opened at 233 Broadway.
• Petite Maman, a café, bakery and restaurant , opened at 210 Murray St.
• All’Antico Vinaio, the legendary Florentine sandwich shop, opened at Brookfield Place.
• Remi Flower & Coffee, a flower and coffee shop, opened at 130 William St.
• Carrot Express, a health-forward restaurant chain, opened at Brookfield Place.
• Wildacre Rotisserie, a fresh take on the traditional rotisserie restaurant, opened at 101 Maiden Ln.
• La Maison du Chocolat, a chocolate shop, opened at 185 Greenwich St.
• Sift Cakes & Cookies, a bakery and sweets shop, opened at 88 Fulton St.
• Jersey Mike’s, a sandwich chain, opened at 111 Fulton St.
• Jimmy John’s, a fast food chain, opened at 102 Fulton St.
• Chicken n Gyro, serving high quality Halal and Middle Eastern Food, opened at 80 John St.
• Naya, a customizable salad and bowl chain, opened at 75 Wall St.
• Hercules Mulligan, a cocktail and spirits brand inspired by the American Revolutionary War hero, is opening a bar at 220 Front St.
• Cobble Fish, an outdoor only, seafood eatery, is opening at Pier 16 at the Seaport.
• Layers Bakeshop, a new bakery, opened at 93 Nassau St.
• Heavenly Market Gourmet, selling various lunchtime cuisines, opened at 75 Chambers St.
• Tribeca Olive Branch, a deli, just opened at 146 Chambers St.
Two non food and beverage locations opened as well:
• Socceroof, an indoor soccer facility, is opening at 28 Liberty St.
• Halo, a 30,000 sq. ft, 750-person capacity event space, opened at 28 Liberty St.
Sadly, three retailers closed this quarter:
• Nish Nush, a fast-casual Mediterranean spot, closed at 41 John St.
• 22 Thai Cuisine, a Thai restaurant, closed at 59 Nassau St.
• Harry’s Italian, an Italian American restaurant, closed its Battery Park City location at 225 Murray St.
City Hall Park
Looking ahead, 11 retailers are looking to open shop later in 11 retailers are expected to open later in 2024, including:
• Club Studio, a fitness studio, will open at 66 John St.
• Thames Promenade will open at 115 Broadway.
• Peck Slip Social, a bar with live music and games, will open at 24 Peck Slip.
• The Bridge Cafe, an historic restaurant and bar, plans to reopen at 279 Water St.
• The Golden Mall, a Chinese food emporium, plans to open at 47 Broadway.
• Ateaz Cafe, a new cafe, plans to open at 77 Greenwich St.
• Tutto Calcio Espresso Bar in the Artezen hotel plans to open at 20 John St.
• Otani, a Japanese restaurant, plans to open at 59 Nassau St.
• Ess a Bagel, a bagel shop, plans to open at 115 Broadway.
• Daily Provisions, serving breakfast, lunch, and dinners, plans to open at Hudson Eats in Brookfield Place.
• Wonder, a dine-in and food delivery service, is opening at 5 Hanover Sq.
• Sephora will open at 175 Broadway.
• Brooks Brothers plans to open at 195 Broadway.
Oktoberfest Stone Street
HOTELS + TOURISM
Lower Manhattan Enjoys Second Straight Quarter of Record-High Occupancy, ADR Reaches a New Q3 Record
Lower Manhattan’s hospitality market posted an impressive 89% occupancy rate, unchanged from Q2. 2024’s Q3 rate also out-performed Q3 2023 by 7%, and gained a slight 1% edge over the pre-pandemic figure. Downtown’s back-toback quarters of record high occupancy suggest that one of the primary facets of post-pandemic recovery indicators, hotel room occupancy, has fully rebounded. Additionally, the broader NYC market reached a record 87% rooms occupied (tied with 2018 figures) — a testament to the city’s post-Covid progress within the hospitality and tourism industry.
The average daily room rate (ADR) also remained high at $303.62, the highest Q3 ADR on record. Lower Manhattan ADR grew 9% year over year and 4% on a quarterly basis (reflecting a years long trend of ADR declines following Q2). Citywide room rates increased 19% over the year, but still remain 34% below pre-pandemic levels. While the downtown and Midtown submarket ADRs have made a full recovery, hotels in other neighborhoods have yet to see ADR make a sustained improvement.
Tourism Continues to Rebound
Lower Manhattan welcomed 9.4 million tourists in 2023, a 27% boost from 2022, as domestic and international travel continues to rebound from the pandemic. Though still below 2019’s 14 million tourists, 2023 tourism numbers indicate a full rebound in the coming years. Also, compared to 2020, the number of tourists has surged by 250%; the number of unique visitors rose considerably, too, by 150% since 2020–and stands at a total of 12.7 million as of 2023.
International visitors made up 54% of Lower Manhattan tourists, nearly double the 28% in 2021. Pre-pandemic, in 2019 that figure was 62%. Additionally, just like 2022, the largest share of international visitors hailed from Western
Hotel Occupancy in Lower Manhattan and New York City
Source: CoStar/STR
Hotel Average Daily Room Rate (ADR) in Lower Manhattan and New York City
Source: CoStar/STR
Europe: Germany, France, UK, Canada, Italy and Spain. Also, the share of first-time visitors to NYC (out of all visitors) reached 51% – the highest since 2019.
Lower Manhattan Hotel Inventory and Development
The current hotel inventory in Lower Manhattan stands at 8,548 rooms across 44 hotels. One hotel opened in the third quarter:
• Tribeca Hotel FiDi opened at 102 Greenwich St. and consists of 50 rooms. The property was acquired for $15.3 million, converting it from a five-story King’s College dormitory.
RESIDENTIAL
Inventory and Development
Lower Manhattan has 35,104 units in 347 residential buildings. There are 8,015 units in 19 buildings under construction or planned for development, with about 68% currently planned as rental units and 42% as condos. There were no new developments or issuances of certificates of occupancy in the third quarter.
Later in 2024, one additional residential development is expected to wrap construction and open:
• 1 Park Row: Construction topped out at 1 Park Row, a 23-story mixed-use building. The 305 foot-tall structure will yield 103,000 sq. ft. with 58 condominium units in one- to three-bedroom layouts, along with 19,000 sq. ft. of office and retail space on the lower levels. The most recent update is that Circle F Capital provided $50 million of financing to further develop 1 Park Row.
Over the next several years, 19 new developments containing 8,015 units are slated for completion. 2,929 new units (37% of the total) will be in new construction projects, while the remaining 5,086 units (63% of the total) will be in office to residential conversions. Some of these projects include:
New Construction:
• 7 Platt St.: Moinian Group is building a new 250-unit tower that will also contain a hotel component. 7 Platt St. is expected to open in 2025.
• 8 Carlisle St.: Excavation continues at 8 Carlisle St., the site of a 64-story residential skyscraper. Designed by Handel Architects and developed by Carlisle New York Apartments and Grubb Properties, which closed on a $86 million loan for the project over the summer, the 712-foot-tall structure will yield 326,221 sq. ft. with 462 residential units, 7,000 sq. ft. of commercial space, and a 60-foot-long rear yard.
• 250 Water St.: In late 2021, the Seaport Entertainment Group was approved on its $850 million development project. The firm will convert a parking lot into a 324-foot-tall building with 270 apartments (including 70 affordable units), Class A office space, retail and community space. The project will generate $50 million in funding for the South Street Seaport Museum, with $40 million generated from the Howard Hughes project and another $10 million committed by the City. The
project broke ground in 2022, and remediation has since been certified through the New York State Brownfield Cleanup Program. In the most recent development, the New York State Court of Appeals shot down a motion from local groups opposing the new building on the grounds that it went against the landmark district designation and that the Landmarks Preservation Commission was wrong to approve the project. With the New York State Supreme Court overturning the previous decision to halt development, the project has cleared its final legal hurdle.
Office to Residential Conversions
• 55 Broad St.: MetroLoft and Silverstein Properties are currently converting the 410,000 sq. ft. building into 571 market-rate apartments along with amenities such as a fitness center, a pool, a rooftop terrace with outdoor entertainment space and a tenants’ lounge.
• 160 Water St.: 160 Water St., which already has a certificate of occupancy, nears construction completion. The 29-story residential conversion, developed by Vanbarton Group and designed by Gensler, includes three additional floors and 588 rental units with amenities.
• 222 Broadway: A permit application was filed by GFP Real Estate and Texas Pacific Group (TPG) on August 7 to convert a 31-story, 756,138 sq. ft. office building into 798 apartments. The project is estimated to cost $43.6 million. GFP purchased the property from Deutsche Bank’s asset management arm for $150 million, which is less than a third of the $500 million the bank paid for the building in 2014.
• 111 Wall St.: Nathan Berman’s Metro Loft Management and InterVest have partnered to transform a 1.2 million sq. ft. tower into 1,300 rental units. Construction is slated to commence in mid-2025, with the first units anticipated to become available in 2026.
• 77 Water St.: The Vanbarton Group has agreed to purchase Sage Realty’s property at 77 Water St. for approximately $95 million. They intend to convert the 26-story office building into up to 600 residential units. This deal is anticipated to be finalized by the end of the year.
• 80 Pine St.: Joseph Hoffman’s Bushburg has bought 80 Pine St., a 1.2 million sq. ft. office building, for $160 million. According to permits from the Department of Buildings, the
developer plans to convert the 38-story office tower into a partially residential building. The project involves creating 500 housing units on floors 2 through 17, with each floor containing approximately 50 units. The building’s exterior windows will also be replaced, and there will be parking for 260 bicycles. The estimated construction cost is around $40 million.
One Park Row
130 Liberty Street
Lower Manhattan Rents Outpace the Rest of the Borough, Residential Sales Pick Up
Lower Manhattan’s third quarter rent prices continued to rise, reaching a median rate of $4,695. This marks a 1% increase over the previous quarter and a 17% growth rate compared to pre pandemic figures. Rental price per sq. ft, which currently stands at $80.75, has risen over the quarter, year and compared with pre pandemic figures as well. Furthermore, the district’s median rent surpassed the citywide rent value of $4,200 per month.
Sales figures for Lower Manhattan fell to a median value of $985,000 in the third quarter, a 7% quarterly and 9% annual decline. Lower Manhattan sales prices have been sinking since Q4 2022. The average price per sq. ft. has fallen from the Q4 2022 high of $1,841 to $1,221 in Q3 2024. Citywide sales also declined over the quarter and year, ending Q3 with a median sales value of $1,115,000. The slide in average sale prices is no doubt related to elevated interest rates. The Fed’s recent and anticipated rate cuts provide reason for optimism as home buyers are likely to take advantage of lower mortgage rates.
Median Residential Rental Price
Source: Miller Samuel
Median Residential Sales Price
Source: Miller Samuel
$4,695
Median Rent Price in the Third Quarter
MAJOR PROJECTS UPDATE
World Trade Center
Site 5
A partnership between Brookfield and Silverstein Properties received approval from the Port Authority and Lower Manhattan Development Corporation (LMDC) to develop Site 5 at the World Trade Center, also known as 130 Liberty St. The site recently served as a Port Authority police depot and the southernmost area continues to function as a temporary public plaza.
The proposed 1.56 million sq. ft. tower is expected to include approximately 1,300 rental apartments, of which at least 30% will be affordable. LMDC approved an override to city zoning rules in order to build a tower larger than local regulations allow. 5 WTC will also include roughly 10,000 sq. ft. of nonprofit community space to be occupied by the Educational Alliance, over 190,000 sq. ft. of retail and office space and a connection to Liberty Park.
Pace University
In December 2022, Pace announced plans to renovate One Pace Plaza, adding new academic spaces, a modernized residence hall and a new performing arts center. The renovation will include the reconstruction of the lower floors of One Pace Plaza East and upgrades to the dormitory building at 182 Broadway. Construction is expected to be completed in 2026.
The university recently announced the formation of the Sands College of Performing Arts, as it has just finished construction. It is housed within a new performing arts center at One Pace Plaza containing a 450-seat proscenium theater, a 200-seat flexible theater and a 99-seat black box theater. Rob and Pamela Sands gave a $25 million donation, which is part of a fundraising campaign that includes private donations and $30 million from the state and federal governments.
The new building serves as a replacement for Pace’s 50-year-old tower at One Pace Plaza East. 15 Beekman St. is the third property SL Green has built for Pace in the neighborhood. The developer previously built dorm
buildings at 33 Beekman St. in 2015 and 180 Broadway in 2013. The building yields 213,084 sq. ft. and stands 338feet tall. It is alternately addressed as 126–132 Nassau St.
Transportation Infrastructure
Street Reconstruction
Reconstruction of Front Street between Old Slip and John Street began in January 2020 and is planned to be completed in December 2024. Greenwich Street reconstruction, between Barclay and Chambers streets, began in early 2022 and will be completed in October 2025; the adjacent sidewalks at 240 Greenwich St. will also be redone in tandem. Vesey Street reconstruction, between Church Street and Broadway, began in September 2022 and will be completed in June 2025. Nassau Street reconstruction, between Pine Street and Maiden Lane, will be completed in 2025. These projects will replace all underground infrastructure, including water mains, sewers, electric, gas and other utilities as well as construct new streets and curbs.
Water Street Streetscape Improvements
The city began work on the streetscape and public-realm enhancement project along the Water Street corridor in May 2021, which is estimated to be completed in 2025. The $22.8 million project will transform two temporary public plazas at Coenties Slip and Whitehall Street into permanent public spaces featuring new landscaping, seating and concessions. The project also includes new street trees, rebuilt sidewalks and enhanced pedestrian safety from Whitehall Street to Old Slip.
Parks and Open Space
Wagner Park
In July 2022 the Battery Park City Authority (BPCA) closed Wagner Park to begin work on the $221 million South Battery Park City Resiliency Project. Plans for the project call for the demolition and reconstruction of Wagner Park and the Wagner Park Pavillion, ultimately elevating the park by 10 feet and installing flood walls, berms and other resiliency infrastructure from the Museum of Jewish Heritage through Wagner Park and Pier A, moving along Battery Place over to Bowling Green Plaza.
The Waterfront Alliance also announced that the South Battery Park City Resiliency Project has become the 13th project nationally to achieve WEDG® (Waterfront Edge Design Guidelines) verification, which is a national rating system and set of guidelines for resilient and accessible waterfront design. In the latest update, the BPCA has released a request for proposal (RFP) for a new restaurant in Wagner Park.
The latest update came in May 2024, when New York City Mayor Eric Adams announced the groundbreaking of Battery Coastal Resilience. Construction is scheduled to be completed in 2026 and will protect more than 100,00
residents, 200,000 jobs, 12,00 businesses and will create 400 construction jobs, according to the Office of the Mayor.
Climate Resiliency
Resilient Infrastructure
Work continues on parts of the Financial District and Seaport Climate Resilience Master Plan, a resilient infrastructure plan released in 2021 to protect Lower Manhattan from future flooding. The master plan is part of the larger Lower Manhattan Coastal Resiliency strategy, with active capital projects in Battery Park City, the Battery and Two Bridges. The plan calls for the creation of a twolevel waterfront park that extends the shoreline of the East River by up to 200 feet.
The upper level will be elevated by 15 to 18 feet to protect against severe storms, while doubling as public open space. The lower level will be a waterfront esplanade raised three to five feet to protect against sea level rise, while offering access to the East River shoreline. The flood defense infrastructure is projected to cost between five and seven billion dollars and could be in place by 2035, pending funding and prioritization by regulatory agencies.
Governors Island
New York Climate Exchange
New York City selected a consortium led by Stony Brook University to develop a $700 million, 400,000 sq. ft. climate research and development campus on Governors Island that will be called the New York Climate Exchange. The campus will include two new classroom and research buildings, student and faculty housing and university hotel rooms. The campus is expected to host 600 college students, 6,000 job trainees and 250 faculty members and researchers. In addition to Stony Brook University, the development consortium includes IBM, Georgia Institute of Technology, Pace University, Pratt Institute and Boston Consulting Group. Governors Island was rezoned in 2021 to allow for the campus. Construction is expected to begin in 2025 and wrap up in 2028. The Trust for Governors Island has expanded ferry service running every 15 minutes, including the addition of New York City’s first public, hybrid-electric ferry.
New York Climate Exchange
