Lower Manhattan\u2019s office market showed strength in the second quarter of 2026, according to the Alliance for Downtown New York\u2019s report on the neighborhood\u2019s real estate market. In the second quarter, Lower Manhattan reported 1.14 million square feet of new leasing, a 26% increase quarter-over-quarter and a 36% improvement over the five-year quarterly average.\u00a0<\/p>\n
The quarter was boosted by several longtime downtown tenants recommitting their presence to the neighborhood. The largest lease of the quarter was signed by law firm Cleary Gottleib, which closed a nearly 476,000 square-foot deal that will relocate the firm to new space within its existing home at 1 Liberty Plaza. Also at 1 Liberty, AON Insurance renewed its lease for 201,000 square feet. Other prominent leases included the NYC Board of Education Retirement System\u2019s 78,000 square-foot expansion at 55 Water St. and Norm AI, an artificial intelligence powered legal and compliance firm, which moved from 7 World Trade Center to a new 64,000 square-foot space at 1 World Trade Center.<\/p>\n
Lower Manhattan\u2019s vacancy rate remained steady despite substantial leasing activity this quarter. Downtown\u2019s overall vacancy rate finished Q2 at 22.3%, unchanged from the first quarter and down 0.5% year-over-year. The district\u2019s Class A asking rent increased for the third consecutive quarter to $63.60, the highest Class A asking rent since Q2 2021. The district also saw a positive absorption for the quarter, with 2,160,000 square feet leaving the office market. Several newly announced office-to-residential conversion projects helped return the district to positive net absorption this quarter.<\/p>\n
\u201cThe energy in Lower Manhattan this summer, from the Knicks\u2019 ticker-tape parade to the America250 celebrations, was matched by encouraging momentum in the office market. After a subdued first quarter, the strong leasing activity this past quarter is a welcome sign,\u201d Downtown Alliance president Jessica Lappin said.<\/p>\n
Lower Manhattan welcomed 26 new retail establishments to the neighborhood during the first quarter of 2026. Approximately 80% of the openings consisted of food and beverage venues. The quarter\u2019s new openings are headlined by the openings of One Flight Up, a new jazz bar at 108 Greenwich St. and Six Coasts, an outdoor bar and eatery located at Governors Island. In addition, in partnership with KF Braun Management, Seaport Entertainment Group, Capital Properties\/Trinity Center and the MTA the Downtown Alliance welcomed seven new, unique small businesses to Lower Manhattan through its RE:Store program<\/a>. These retailers will be open through Labor Day<\/p>\n While 14 retailers closed for the quarter, dozens of new retailers are in the pipeline. These include a new Uniqlo location at Westfield World Trade Center opening in September and a new outpost for Public Records, a popular Brooklyn music venue, bar and vegan cafe that is expected to open at 219 Water St. at the Seaport in 2027\u00a0\u00a0<\/p>\n Lower Manhattan continues to draw significant visitation in the post-pandemic era. The district welcomed 10.3 million unique visitors (defined as any Lower Manhattan visitor who neither works nor lives downtown) in 2025. Correspondingly, the neighborhood\u2019s hotels enjoyed another quarter of strong occupancies at 88%. Lower Manhattan\u2019s Average Daily Room Rates also posted its highest Q2 on record at $366.99. The current hotel inventory for the neighborhood stands at 8,100 rooms across 42 hotels. Little Something, a new 172 room property located at 7 Platt St. and developed by the Moinian Group opened in Q2.\u00a0<\/p>\n