The demand for Class B office spaces in Manhattan is markedly increasing, attributed to a significant flight to quality caused by limited availability of premium Class A offices. As leasing activity surged to 12.2 million square feet in the first quarter of 2023, the tight supply of prime Class A buildings leads tenants to seek quality Class B options. Converting offices to residential spaces further reduces the supply of Class B offices, intensifying the competition for these properties amid a general recovery in demand.
Demand for Class B Manhattan offices is surging as a result of limited Class A supply, with 12.2 million square feet leased in Q1 2023, the highest since 2019.
Michael Cohen emphasizes the confluence of tightening Class B supply due to conversions to residential, and buildings that cannot transact, highlighting a recovery in Class B demand.
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