New York office market report
Q2 2025
Manhattan leasing activity hit 20.6 million square feet in the first half of 2025, with a broad mix of industries fueling demand and a rise in large deals. Availability dropped to 16.4%- the lowest in over four years- as both direct and sublet space declined. Class A landlords are offering significant concessions, pushing the gap between base and net effective rents to a record $30 per square foot, while steady trophy space demand has allowed for firmer pricing and reduced incentives.
Leasing activity in H1 2025 reached its highest first-half total since 2018
2025’s first half leasing activity in Manhattan has reached 20.6 million square feet (msf); 17.2% higher than that of H1 2024.
The number of 100k+ square feet (sf) transactions in H1 2025 has reached the highest first half-year amount since 2019 with 21 transactions. This increase in leasing activity has been led by the banking, finance, insurance & real estate industry, which has accounted for just over a third of all activity this year.
Manhattan availability rate hits lowest value since 2020
Manhattan’s overall availability rate of 16.4% in Q2 2025 marks the lowest availability rate in over four years. Year-over-year, the overall availability rate dropped by 320 basis points (bps) from 19.6%. This drop came from a decrease in both direct and sublet available space, which currently sit at 69.1 msf and 15.0 msf, respectively.
When accounting for the desirability of space quality, which includes factors like potential conversions, property classifications, and other mitigating elements, the availability rate drops even further.
Gap between class A base and net effective rents reaches highest value to date
The difference between class A base and net effective rents has reached a record high $30 per square foot (psf), while trophy properties have seen their gap narrow to $23 psf.
This widening spread for class A reflects the substantial concession packages landlords are offering to remain competitive, even as they hold firm on rents. On the other hand, steady demand and increased competition for trophy space has allowed landlords to reduce incentives and slightly elevate rents. We expect class A to follow the same trend seen by trophy properties over the next 12-18 months.
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