When trading firm Jane Street Capital expanded its headquarters at 250 Vesey Street from 600,000 square feet to 1 million in February 2025, it was not just a massive lease renewal, but also a sign that the office market in Downtown Manhattan was on its way to a very strong year.
A Colliers report notes that Downtown — generally, the Lower Manhattan market below Canal Street — saw 2.16 million square feet of leasing activity in the fourth quarter of 2025, a number that “more than doubled since Q3 2025 and almost quadrupled year-over-year.”
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Along the way, tenants leased 6.39 million square feet of office space for the year, the highest annual total since 2019 and a massive leap from the 2.55 million square feet of office space leased Downtown in 2024, according to Colliers.
“This was the single strongest full year of leasing volume in Lower Manhattan in the post-pandemic period,” said Franklin Wallach, executive managing director for research and business development at Colliers. “There’s still some road ahead to get back to the pre-pandemic level of demand that was part of a narrative that started in 2011, when Conde Nast signing [as anchor tenant at 1 World Trade Center] revived Downtown. That was the kickoff of the new wave of Downtown. It’s moving back in that direction, but has not yet arrived.”
The Jane Street renewal and expansion was just the beginning for significant leases Downtown in 2025.
John Wheeler, an executive managing director at JLL, notes that while Downtown was expected to wage something of a recovery last year, the end result was far more successful than anyone predicted.
“The Downtown submarket substantially overperformed last year,” said Wheeler. “We had surmised that it was going to be a very big snapback year, but it really exceeded our expectations at the end of the year in terms of not only the volume of transactions and aggregate square footage, but also the types of transactions and who made commitments there.”
On that front, December saw the Office of the New York State Attorney General add another 35,954 square feet to its 342,484 square feet at 28 Liberty Street. Two months prior, fintech firm Stripe expanded in the same building from 146,500 square feet to 285,997 square feet across eight floors.
And Moody’s turned heads in December when it signed a lease for 460,000 square feet at 200 Liberty Street at Brookfield Place, even though it was a consolidation from 758,000 square feet at 7 World Trade Center, resulting in a net loss of almost 300,000 square feet of occupied lease space for Downtown.
A Cushman & Wakefield report notes that there were six lease transactions in the Downtown market of at least 50,000 square feet in the fourth quarter. The report cited overall absorption of available space for the year of 175,720 square feet, “a significant improvement from the negative 1.2 million square feet registered in 2024.”
“New leasing activity increased by 84 percent year-over-year, which was the sharpest increase of all the major markets,” said Lori Albert, director of tri-state research services at Cushman & Wakefield.
The C&W report also noted that Downtown’s vacancy rate hit a 14-quarter low of 22.2 percent.
While Downtown office leasing had a strong 2025, any view of Downtown office is really a tale of two markets: the World Trade Center and Brookfield Place, and then the rest.
According to Savills, the difference in asking rents and availability between WTC/Brookfield and the rest was vast.
In the fourth quarter of 2025, average asking rents at the World Trade Center complex reached $110.35 per square foot, a 5.7 percent increase over the previous quarter. Brookfield Place asking rents reached $85.32. Downtown Class A rents outside those two complexes averaged just $67.35. Class B and C offices Downtown averaged $57.81 per square foot.
The discrepancy was just as wide for availability rates, a measure of vacant or soon-to-be-vacant space. World Trade Center availability dropped to 5.7 percent, and Brookfield fell to 6.8 percent. Elsewhere Downtown, Class A availability exclusive of those two places was 19.9 percent, and Class B and C availability hit 20.2 percent. Savills notes that Brookfield’s availability saw the largest drop, as that 6.8 percent figure marked a dip of 380 basis points from the previous quarter.
Matthew Schreck, research director for New York and the tri-state area at Savills, notes that in 2025, 41 percent of all Downtown office leasing volume occurred in just eight buildings: 1, 3, 4 and 7 World Trade Center, 200 and 225 Liberty Street, and 200 and 250 Vesey Street.
“The average share of Downtown leasing in those eight buildings over the prior five years was just 21 percent, so 2025 was certainly an anomaly,” said Schreck. “However, we do anticipate demand and activity to pick up across the remainder of Downtown through the rest of 2026 and beyond due to the preponderance of options and favorable terms this market offers, compared to the tightness and pressure we’re seeing across much of the rest of Manhattan’s office market.”
To that point, the 2025 success of Downtown office can be fully understood only in the context of Midtown — which saw 20.5 million square feet of new office leases in 2025, a year-over-year increase of 22.9 percent — and Midtown South, which has greatly benefited from the surge in AI adoption.
“The past few years have been really driven by Midtown strength, but 2025 started to see Midtown supply dwindle, so tenants had to explore other areas to satisfy their space needs,” said Michael Slattery, a research manager at CBRE, who notes that what also “moved the needle” Downtown was the return of large transactions, citing the Jane Street lease.
Schreck noted that the greater availability of venture capital funding for the technology sector — much of which has clustered in Midtown South due to strong transit access and Class A properties — after a post-pandemic slowdown proved to be a boon for Downtown leasing.
“VC funding was very slow in 2023, so Midtown South was lagging as well,” said Schreck. “But then suddenly you’ve got the surge in AI companies looking for space, and the amount of funding picking back up. So the Midtown South recovery picked up in late 2024 and into 2025, and availability became very tight. It forced users to make certain sacrifices in terms of their location analysis and search for space, and Downtown came back into play.”
For companies shut out of Midtown South, Downtown’s lower rents and higher availability became a sweetener. According to a fourth-quarter Savills report, asking rents for the quarter averaged $60.43 per square foot for office space throughout Downtown total, while space in Midtown and Midtown South averaged $82.80 and $84.76, respectively.
Michael Joseph, a vice chair at Colliers, noted that Downtown office also benefited in 2025 from the technology, advertising, media and information (TAMI) sector being the last to fully embrace the return-to-office movement.
“The last group of industries to go back to the office would probably be the TAMI sector, the more creative types,” said Joseph. “A lot of those individuals live in Brooklyn, the East Village or SoHo, so Downtown’s a natural commuting spot for them. There’s a lot of good energy Downtown due to demand, the characteristics of the area, the ever-growing 24/7 population, and what I think we’ll see as the next trend — a step-up by restaurateurs in opening new branches down there, because they can get action there now after work and on the weekends.”
Another factor in Downtown’s revival has been the growing amount of buildings being converted from office to residential. Conversions take supply off the office market throughout Manhattan, creating greater demand for the spaces that remain.
“In 2025 alone, there was about 400,000 square feet of space removed from the market for planned conversions,” said Wallach. “For every million-square-foot building that’s slated for conversion, you see a string of activity equal to about a quarter-million square feet from tenants that have to relocate.”
The supply-versus-demand equation has gotten to a point where some conversion candidates are being reconsidered.
Bernadette Brennan, executive director of SERHANT Commercial, had been trying to sell an office building at 10 Harrison Street in Tribeca, and hoped it would be seen as a strong contender for residential conversion.
But the blend of a too-high asking price from the seller and increased demand for office in the area made it more sensible to leave the building as an office property.
“We just did a lease for 10 Harrison Street to an AI company that just raised $1 billion in their Series A funding,” said Brennan, who noted the asking rent was $75 per square foot. “We were trying to sell it, but the interest seems to be in leasing it. We were hoping it was going to be a conversion project, but because of the price, it just doesn’t pencil out. In the process of trying to sell it, someone came in and said, ‘We’ll take it tomorrow. We want a lease.’ For now the property will stay office, even though it has residential conversion potential.”
So far in 2026, Downtown office leasing remains strong, with 320,804 square feet leased in January, a 69.3 percent increase year-over-year, according to C&W.
Given all this, this year is poised to be another strong one for office leasing in the Downtown market.
“Demand is very healthy, continuing at a pace from 2025,” said JLL’s Wheeler. “There’s a deep and significant pipeline of pending deals, and the dynamics that support the cost-
conscious demand side of the mix are still ongoing. There is still very good demand in that sector. I think 2026 will be a very good year.”
Larry Getlen can be reached at lgetlen@commercialobserver.com.