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Leasing demand plummets to record low as pandemic keeps businesses at home
COVID-19 caused major dislocation within the Manhattan commercial office market during the second quarter of 2020. As virus control measures forced organizations to continue working remotely, many leasing decisions were put on a “pandemic pause." Management teams re-evaluated strategic priorities, operating models, cost structures and, office space footprints. As a result, overall demand for office space plummeted. Second-quarter leasing activity totaled just 3.3 million square feet (msf), down 57.8% from Q1 and 71.2% year over year. Very few transactions over 100,000 square feet (sf) were seen. Many leases that were in stages of negotiation pre-COVID-19 were nudged across the finish line with additional last-minute incentives, some at a 10-20% discount to prepandemic term sheets.