Snapshots

Office leasing jumps in Q4 as larger deals begin to transact

January 17, 2024

Contributors:

Consistent improvement in TIMs volume over the course of the year is translating more directly into leasing gains, with Q4 growing 14.1% QoQ to 46.4 million s.f., the highest level since Q2 2022. Slower activity early in the year brought 2023’s gross leasing activity to 72 percent of pre-pandemic levels, but Q4’s activity reflected 81 percent of a typical pre-pandemic quarter.

A major contributor to the uptick in lease volume at year-end was a return of larger leases, which had largely been placed on hold as interest rates were rising but are gradually returning to the market. Large Q4 leases included an over 700,000 s.f. sublease by Walmart Labs and nearly half a million s.f. subleased by OpenAI, as well as Manhattan’s largest lease in 2023 from legal services firm Paul, Weiss who leased 765,000 s.f. in 1345 Avenue of the Americas.

Overall, more than 50 lease transactions over 100,000 s.f. closed in the fourth quarter, the highest volume recorded at quarter-end this year.

As market conditions stabilize, some tenants are showing more willingness to transact in 2024: a Capgemini Research Institute survey of over 2,000 global businesses found that 25% intend to increase their spending on office real estate in 2024, up from 4% in 2023.

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