Downtown Alliance Report: Latest Ups and Downs of Local Real Estate

Left: Reflecting a big surge in tourism, hotel occupancy rates are at their highest level. Right: The high office vacancy rate remains largely unchanged, 25% below a 5-year average. Photos: Carl Glassman/Tribeca Trib

Tourists are flooding Downtown hotels like never before, while the area’s post-Covid office-rental slump remains largely unchanged.

Those are two of the takeaways from the Downtown Alliance’s 2nd quarter report [1] on the state of Lower Manhattan real estate below Murray Street. 

“While the office market remains slow but stable, our hospitality sector has taken off, with record numbers of visitors filling up our Lower Manhattan hotels,” Downtown Alliance president Jessica Lappin said in a statement. “Tourism is back across the city but our hotels have eclipsed even the Midtown and city-wide occupancy rates.”

More than half of those tourists—54%—are from other countries, overwhelmingly Western Europe, the Lower Manhattan Real Estate Market Report says.

The 2nd quarter report shows an 89% occupancy rate for Downtown hotels, a record that is well above last year’s numbers and surpasses even pre-pandemic levels. Average room rates, at $317.16, also hit a record high. No new hotels opened during the past quarter, but the Alliance counts four in the pipeline.

The amount of empty office space in Lower Manhattan, at nearly 24%, remained about the same over the 1st quarter, with a little over a third of new leases signed by tech companies. Compared to a five-year average, office occupancy is down by a quarter. 

As usual, eating and drinking establishments dominated new retail openings, 14 in all; only one shopping location opened.

Not surprisingly, the news for residential landlords is bright. They are reaping a median average rent of $4,655, “the second highest rent value the district has ever seen,” says the Alliance.