News Summary
The Manhattan office market has achieved a remarkable leasing surge in Q3, reaching 6 million square feet. With a total of 21.7 million square feet leased this year, the vacancy rate has dropped to 14.8%, the lowest in five years. Significant leases, including those by Deloitte and Amazon, signal renewed confidence in the market despite concerns about remote work. Analysts project continued growth toward 27.3 million square feet in leasing activity for 2025, highlighting the resilience of Manhattan as a global business hub in a changing economic landscape.
New York—Manhattan’s office market has experienced an unprecedented surge in leasing activity during the third quarter of 2023, achieving record volumes that defy ongoing concerns about remote work. In Q3 alone, leasing activity reached 6 million square feet, contributing to a total of 21.7 million square feet for the year, marking a 7% increase year-over-year. The vacancy rate has fallen to 14.8%, the lowest it has been in the past five years, while trophy building vacancies have dropped to 7.6%, nearing an all-time low.
Notable leases highlight this renewed confidence in the Manhattan office market, with significant transactions taking place, including the expansion of the Bank of New York into former Condé Nast floors at One World Trade Center. Other large leases in Q3 included Deloitte’s substantial 807,000-square-foot commitment at 70 Hudson Yards, NYU’s lease at 770 Broadway, and Amazon’s acquisition of space at 10 Bryant Park.
According to recent research from CBRE, both availability and vacancy rates in Manhattan are now at their lowest levels since 2021. Sublease availability has drastically decreased, nearly halving since the beginning of 2023, now sitting at 12 million square feet. This figure is only 1.5 million square feet more than the total sublease supply at the end of 2019, illustrating a recovery trend in the market.
Average direct-lease rents in Midtown climbed by 2% to $85.44 per square foot, while trophy location rents rose by 3.1%, reaching $132.24 per square foot. These increases reflect a broader upward trend in asking rents, with August’s average asking rent slightly increasing to $74.73 per square foot.
This impressive leasing activity and lower vacancy rates stand in contrast to the narrative of distress that has circulated regarding the office market, particularly in the face of rising work-from-home arrangements. JLL Vice Chairman Joe Messina pointed out that these substantial long-term commitments signify a robust confidence in Manhattan’s enduring status as a global business hub.
Recent Trends and Future Projections
The office leasing market in Manhattan is not just witnessing historical activity; it is set for further growth. Overall leasing activity for 2025 is currently projected at approximately 27.3 million square feet. Analysts anticipate that Manhattan will surpass 40 million square feet of office leases in 2025, marking the first time this milestone has been reached since 2019.
August alone saw around 3.7 million square feet of office space leased in Manhattan, exceeding the 10-year monthly average. The availability rate has tightened to 15%, the lowest since January 2021. In Midtown South, leasing activity saw a remarkable 64.8% month-over-month increase, tallying up to 2.2 million square feet in August.
Changing Landscape
In response to New York’s housing shortage, property conversions have become a mainstream strategy. Old office properties are increasingly being transformed into residential spaces, reflecting changing market dynamics. This trend of converting office spaces to residences is further propelled by recent policy adjustments aimed at alleviating the housing crisis in the city.
In downtown Manhattan, leasing activity in August accounted for about 191,000 square feet, with an 18.5% availability rate remaining stable. Overall, the Manhattan office market seems resilient, showcasing a promising recovery and navigation through the uncertainties imposed by changing work trends and evolving economic conditions.
Deeper Dive: News & Info About This Topic
- New York Post: Office Vacancies Hit 5-Year Low
- CoStar: New York’s Office Leasing Recovery
- Crain’s New York: Strong August Numbers
- Encyclopedia Britannica: Office Space
- Google Search: Manhattan office market
Author: STAFF HERE NEW YORK WRITER
The NEW YORK STAFF WRITER represents the experienced team at HERENewYork.com, your go-to source for actionable local news and information in New York, the five boroughs, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as New York Fashion Week, Macy's Thanksgiving Day Parade, and Tribeca Film Festival. Our coverage extends to key organizations like the Greater New York Chamber of Commerce and United Way of New York, plus leading businesses in finance and media that power the local economy such as JPMorgan Chase, Goldman Sachs, and Bloomberg. As part of the broader HERE network, including HEREBuffalo.com, we provide comprehensive, credible insights into New York's dynamic landscape.
