{"id":279098,"date":"2026-06-26T17:25:22","date_gmt":"2026-06-26T17:25:22","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/279098\/"},"modified":"2026-06-26T17:25:22","modified_gmt":"2026-06-26T17:25:22","slug":"manhattan-subleasing-tightens-as-ai-firms-fuel-office-growth-in-q2-commercial-observer","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/279098\/","title":{"rendered":"Manhattan Subleasing Tightens as AI Firms Fuel Office Growth in Q2 \u2013 Commercial Observer"},"content":{"rendered":"

Artificial intelligence and technology companies have been driving demand for office space in Manhattan during the second quarter of 2026, helping to soften the city\u2019s post-pandemic sublease glut, according to preliminary second-quarter data from JLL<\/a>.\u00a0<\/p>\n

Manhattan\u2019s sublease inventory has fallen below 11 million square feet, according to JLL, a steep drop from the late-2022 peak of approximately 23 million square feet of sublease space available. That decline is the result of an increase in leasing activity by AI companies, JLL found (although law firms have taken a rather large chunk of space<\/a> so far in 2026 as well).\u00a0<\/p>\n

SEE ALSO: Korean Chef Jiho Kim to Open Flagship Restaurant at 21 West 17th Street<\/a><\/p>\n

So far this year, AI firms have signed 21 deals totaling 719,200 square feet in Manhattan, a number that is on track to overtake last year\u2019s total of 845,000 square feet. About 70 percent of the leases signed were in the Midtown South market, which is evolving into a \u201ctech and innovation core\u201d in the city.\u00a0<\/p>\n

Some of those Midtown South deals included AI sales platform Clay<\/a> relocating<\/a> to 163,095 square feet at 11 Madison Avenue in March and AI-driven advertising firm Agentio<\/a> taking<\/a> 20,000 square feet at 295 Fifth Avenue, also in March.<\/p>\n

\u201cManhattan\u2019s office market gained momentum throughout the second quarter as demand continued to concentrate in high-quality space,\u201d Jamie Katcher, executive managing director at JLL, said in a statement.\u00a0<\/p>\n

\u201cThe most notable development is how quickly the sublease overhang has been absorbed,\u201d Katcher added. \u201cGrowth from AI firms, as well as financial services companies and law firms, is driving long-term leasing decisions, while landlords are increasingly pulling back available sublease space to pursue direct deals at substantially higher rents.\u201d<\/p>\n

Overall, office availability across Manhattan dipped by 50 basis points to 12.7 percent on a quarter-over-quarter basis, according to JLL\u2019s data, meaning there was about 2 million square feet less space available in the second quarter than in the first three months of the year.\u00a0<\/p>\n

In June alone, overall leasing volume in the borough reached 1.1 million square feet, while 17 million square feet have been leased year-to-date. The average asking rent for office space in Manhattan was $84.23 per square foot in the second quarter.\u00a0<\/p>\n

Amanda Schiavo can be reached at aschiavo@commercialobserver.com<\/a>.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Artificial intelligence and technology companies have been driving demand for office space in Manhattan during the second quarter…\n","protected":false},"author":2,"featured_media":279099,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[107258,107259,86378,2361,75,84,83,9,24,63,2362],"class_list":["post-279098","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-11-madison-avenue","tag-295-fifth-avenue","tag-jamie-katcher-channel","tag-leases","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-new-york","tag-new-york-city","tag-nyc","tag-office-leases"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/279098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=279098"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/279098\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/279099"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=279098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=279098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=279098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}