Real Estate Report Highlights Lavish Costs for Living Space, But Bargains for Businesses
The Lower Manhattan real estate market was divided between robust demand for housing and flagging interest in office space, according to the Lower Manhattan Real Estate Market Report for the second quarter, produced by the Downtown Alliance.
Among those seeking to live Downtown, renters were facing median prices of $4,500 per month, as opposed to $4,300 for Manhattan as a whole. This metric is seven percent higher than in the first quarter of 2023, and almost 13 percent higher than before the Covid pandemic, according to the Alliance, which adds that “available units were leased on average 14 days faster than in the previous quarter, suggesting that rents may continue to rise amid high demand and tight supply.”
For would-be homebuyers, the data are similarly daunting. “The median sales price for co-ops and condos in Lower Manhattan rose to $1.275 million, up nearly seven percent from the first quarter,” the report notes. But the market for owner-occupied units shows some signs of cooling, as these prices are ten percent lower than the same period in 2022, and 39 percent shy of the record set at the end of 2022.
Anybody wishing to rent office space in the community, however, is presented with rich pickings, with 24.2 percent of inventory currently vacant—a new record. While some large new leases were signed in the second quarter of this year, these were eclipsed by even larger blocks of space becoming available, as firms grappling with the remote-work trend that began during the pandemic continue to shed square footage. In two hyper-local segments of the Downtown office market—Financial West (west of Broadway and south of Liberty Street) and the Insurance District (east of Broadway and north of Maiden Lane—office vacancy rates have topped 35 percent.
The Alliance reports, “Lower Manhattan’s overall average asking rent [for offices] inched down… to $56.27 per square foot,” which marks the seventh consecutive quarter that this benchmark has lingered below the crucial baseline of $60.
These dynamics may speak directly to the future of the local residential landscape, as office-building owners, faced with an uncertain future, mull plans to repurpose their properties for use as apartments. Several such conversion are now underway in Lower Manhattan, which may augur a larger trend.
“Although the office market across the City is still trying to find its footing amid continued macroeconomic uncertainty, the streets of Lower Manhattan were bustling this spring, as our pedestrian counts sharply increased,” said Alliance president Jessica Lappin. “There is also good news on the retail front, where a strong quarter of new openings reflected the ongoing diversification of businesses in the neighborhood.”
In the retail sector, the Alliance report notes that 21 restaurants and shops opened in the second quarter, while 11 closed. Pedestrian counts indicate that foot traffic jumped by average of 28 percent from the end of the first quarter and 12 percent from the second quarter of last year.