New Class B and C office leasing in Manhattan hit roughly 7 million square feet in the first half of 2026, surpassing every comparable period since 2015, per CoStar.
\n Owners including Empire State Realty Trust, Feil Organization, and Kaufman Organization are adding roof decks, conference centers, and event space to buildings that once competed mainly on price.
\n The shift reflects a broader flight-to-quality dynamic spilling down-market, as tenants prioritize amenitized, well-run buildings over class labels tied strictly to rent.<\/p>\n
Key Takeaways<\/p>\n
Manhattan Class B and C office space is absorbing tenants at a pace not seen in years, and owners are racing to add Class A-style amenities<\/a> to keep them, according to Commercial Observer. New leasing in those buildings reached roughly 7 million square feet in the first half of 2026, according to CoStar, outpacing every comparable stretch since 2015. That demand comes with a catch: tenants increasingly expect the roof decks, event spaces, and conference centers once reserved for trophy towers.<\/p>\n Get Smarter About What Matters in New York<\/p>\n Subscribe to our free newsletter covering the biggest commercial real estate stories across the five boroughs \u2014 delivered in just 5 minutes.<\/p>\n How It Started<\/p>\n Class A leasing in Manhattan slipped to 10.3 million square feet in the first half of 2026, down from 11.6 million square feet a year earlier, per CoStar. Class B and C space picked up the slack, aided by less Class A availability and rising Class A rents.<\/p>\n CoStar noted that Class B and C buildings made up roughly 40% of new leasing activity in the first half of 2026, up from 31% last year and back near the pre-pandemic average of 39%. The firm concluded that \u201cthe city\u2019s office recovery is no longer limited to trophy or top-tier buildings.\u201d<\/p>\n The Details<\/p>\n Cushman & Wakefield\u2019s second-quarter 2026 report placed Class A asking rents at $88.50 per square foot in Midtown and $104.50 in Midtown South. By comparison, Empire State Realty Trust signed Jencap Group for 19,883 square feet at 1350 Broadway in October 2025 and Steve Madden for 60,000 square feet at 501 Seventh Avenue in April 2026, both in the low $60s per square foot.<\/p>\n ESRT leans on scale to fund amenities across its seven-building, 6-million-square-foot Midtown portfolio, including a 130-person conference center at 1400 Broadway and a 250-person rooftop at 1333 Broadway. Smaller owners are finding creative workarounds instead: Feil Organization is building a 14,000-square-foot roof deck at its 357,000-square-foot 7 Penn Plaza, and Kaufman Organization built a roughly $300-per-square-foot amenity center in the basement of 875 Sixth Avenue, known as One NoMad.<\/p>\n Zooming Out<\/p>\n Terraces and \u201ctown hall\u201d-style meeting space are now the amenities most in demand, while office gyms have become less of a priority, owners and brokers told Commercial Observer. Williams Equities principal Michael Cohen described a \u201csea change\u201d in Class B amenity strategy over the past decade, driven partly by employers trying to lure workers back from home.<\/p>\n The trend tracks with broader momentum in the borough, where office leasing<\/a> has strengthened enough to push rents higher even outside the trophy tier.<\/p>\n Why It Matters<\/p>\n The amenities race signals that the flight-to-quality dynamic that has defined Manhattan\u2019s Class A recovery is spilling into the Class B market, forcing smaller, often individually owned buildings to compete on experience rather than price alone. Newmark\u2019s David Falk called outdoor space and roof decks \u201cgame-changers\u201d for leasing at older buildings.<\/p>\n