Manhattan’s office market, once feared to be stuck in a pandemic-driven “doom loop,” has instead become one of the tightest in the city’s recent history. Brokerage data show the borough’s roughly 450 million square feet of office space is now more occupied than it was before COVID-19 emptied out towers across the city.
Real estate firm CBRE found that average asking rents across Manhattan rose nearly 4% over the past year. But CBRE research director Michael Slattery cautioned that the headline number understates what’s actually happening in the market.
“The best space is being leased quickly, leaving lower-quality space on the market. As a result, rent growth for the most desirable floors is likely higher than overall figures suggest,” Slattery said.
Other brokerages point to similarly sharp increases. Colliers reported that Midtown asking rents climbed from $80.71 per square foot to $84.99 over the past year. In top-tier Class-A buildings, Savills found an even steeper jump, from $75.44 per square foot to $94.91 — a 9.9% increase.
CBRE’s full third-quarter market survey is due out next week, but separate reports from Colliers and Savills put overall availability at 13.1% and 13.4%, respectively — the lowest levels recorded since early 2020.
The squeeze is most acute at the top of the market. Vacancy in the newest, amenity-rich buildings favored by employers is barely 12%, according to both surveys, making it difficult for companies looking to expand their footprint in Manhattan.
“I have law tenants who want to add more than 50,000 square feet and there’s close to zero available,” said a commercial broker who spoke on condition of anonymity. “Forget the pandemic — we haven’t seen a market so tight for premium floors since before 9/11.”
Major Leases Across the Borough
The third-quarter surge was fueled by large new leases, renewals and expansions spanning nearly every Manhattan submarket, from the World Trade Center downtown to the planned 625 Madison Ave. tower at East 58th Street. That building hasn’t been constructed yet, but financial and insurance firm General Atlantic has already signed on for 150,000 square feet with developer Related Companies.
Elsewhere, law firm Proskauer Rose renewed and expanded its space to 476,000 square feet at 11 Times Square, while artificial intelligence company Anthropic leased the entirety of the 465,000-square-foot building at 330 Hudson St.
Despite the demand, no significant new inventory is expected to hit the market for years. Projects including Vornado and Ken Griffin’s planned tower at 350 Park Ave., BXP’s 343 Madison Ave. and SL Green’s 346 Madison Ave. remain in the pipeline rather than ready for tenants.
The anonymous broker said the tight market hasn’t yet pushed companies out of the city entirely, but some are weighing alternatives for parts of their workforce. “Nobody’s moving to New Jersey yet, but some companies are thinking about it for support staff,” the broker said.
JLL broker Kristen Morgan told the New York Post that some tech and AI tenants are unwilling to wait out the roughly 18 months it would take to build a planned Hudson Square tower.
“They want butts in seats now,” Morgan said.
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