Manhattan Office Leasing Surge: Key Takeaways (September 2, 2025)
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Manhattan’s office leasing market is experiencing a meaningful rebound. August saw a 20% increase in leasing activity compared to july, reaching 3.7 million square feet - well above the 10-year monthly average of 2.72 million square feet. If this pace continues through 2025, annual volume could surpass 40 million square feet, a level not seen since 2019.
Demand is driving the recovery. The market has returned to its pre-pandemic average of 32-33 million square feet leased annually, a milestone reached for the first time since 2020. This strong demand is fueled by a return to office work, low unemployment, and the resurgence of key industries like technology.Amazon,for example,has leased over a million square feet since November 2024 through various agreements.
The legal sector is also a major contributor. Manhattan saw record law firm leasing activity in 2023 (over 4 million square feet), and 2024 remained strong, exceeding 2019 levels.
“Flight to Quality” is impacting availability. Demand is heavily focused on newer,high-quality buildings like One Vanderbilt,Hudson Yards,and Manhattan West,were availability is extremely tight (6.7%). This contrasts sharply with older, prewar buildings, which have a much higher availability rate of 17%. manhattan’s overall availability rate has fallen to 15%, the lowest as january 2021, and has been stable or tightening for 18 consecutive months.
Rents are rising, but still below pre-pandemic levels. The average asking rent in Manhattan was $74.73 per square foot at the end of August, a 1% increase from July. However, rents remain 6% lower than in March 2020. Landlords are beginning to reprice existing space upwards.
Office conversions are reshaping the market. Nearly 9 million square feet of Manhattan office space has been removed from the market over the last four years due to conversions. This reduction in supply is driving up both leasing activity (as tenants relocate) and average prices. For every million square feet converted, approximately 270,000 square feet of new leasing activity is generated. The removal of typically lower-priced space from conversions also contributes to an overall increase in average market prices.
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