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Manhattan, NY Manhattan\u2019s office market closed 2025 with its strongest quarterly leasing performance since late 2019, as tightening availability, rising rents and growing tech demand signal a more durable recovery entering 2026.<\/p>\n
Lee & Associates NYC\u2019s 2025 Q4 Manhattan Office Market Report shows leasing volume reached 11.6 million s\/f in the fourth quarter, bringing full-year demand to 42 million s\/f, up 7% over 2024. Availability declined for the seventh consecutive quarter to 13.9%, while net absorption remained positive at 3.7 million s\/f.<\/p>\n
\u201cThe office recovery is no longer theoretical, it\u2019s measurable,\u201d said Todd Korren, executive managing director and director of leasing at Lee & Associates NYC. \u201cTenants are committing to space at scale again, and fundamentals continue to tighten across the borough.\u201d<\/p>\n
Class B Asking Rents Reach Record Highs in Midtown as Leasing Momentum Broadens Beyond Trophy Buildings
\nClass A space accounted for more than 71% of quarterly leasing, driven by major commitments including Moody\u2019s 461,567 s\/f lease at 200 Liberty St. and Bloomberg\u2019s 435,355 s\/f renewal at 120 Park Ave.<\/p>\n
But one of the quarter\u2019s clearest signals came from Class B performance. In Midtown, Class B availability fell to 14.8% while rents rose to $55.65 per s\/f and quarterly leasing surpassed 1 million s\/f. In Midtown South, Class B rents increased to $63.05 per s\/f even as availability declined. Borough-wide, Class B asking rents reached a record-high $68.61 per s\/f.<\/p>\n
\u201cAs prime supply tightens and new development remains limited, well-located Class B assets are capturing renewed attention,\u201d said Korren. \u201cOwners who have reinvested are competing effectively and tenants are responding.\u201d<\/p>\n
AI and Tech Tenants Help Drive Momentum
\nTechnology and AI-driven firms played a visible role in fourth-quarter momentum. Downtown leasing nearly doubled quarter-over-quarter to 1.8 million s\/f, supported by large-block commitments and expanding tech occupancy at One World Trade Center and One Madison Ave. Midtown South Class A leasing climbed to nearly 633,000 s\/f, reflecting continued demand from fintech and AI tenants.<\/p>\n
Lee & Associates\u2019 Justin Myers and Dennis Someck completed a lease with AI company SceniX at 80 Eighth Ave. for 6,000 s\/f.<\/p>\n
\u201cWe\u2019re seeing next-generation companies take meaningful space as they prioritize access to talent and high-quality environments,\u201d said Justin Myers, principal & executive managing director. \u201cThat demand is reinforcing pricing and reducing availability in multiple submarkets.\u201d<\/p>\n
Conversions Reshape Supply, Reinforce Market Tightness
\nOffice-to-residential conversions and limited new office development continue to reshape Manhattan\u2019s long-term supply picture. With millions of s\/f under construction and additional assets exiting inventory, overall availability continues to compress.<\/p>\n
Midtown availability fell to 13.5%, its lowest level since 2020, while Downtown tightened to 14.1%. Midtown South recorded its sixth consecutive quarter of declining availability, falling to 15.0%.<\/p>\n
\u201cAs conversions permanently reduce certain segments of supply, the remaining competitive inventory becomes more valuable,\u201d said Korren. \u201cThat dynamic is contributing to rent growth and stronger positioning for quality assets across multiple vintages.\u201d<\/p>\n
Pricing Reflects Structural Improvement
\nAverage Manhattan asking rents rose to $75.80 per s\/f in Q4, with Class A averaging $87.54 per s\/f. Office visitation also strengthened into year-end, reaching roughly 81% of December 2019 levels.<\/p>\n
\u201cThe consistency of tightening across Midtown, Midtown South and Downtown points to a healthier and more balanced market,\u201d said Woody King, senior managing director. \u201cHeading into 2026, the conversation has shifted from stabilization to positioning.\u201d<\/p>\n