Manhattan Office Leasing Hits Post-2019 High in Q4 2025 | Market Report

Manhattan’s 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.

Lee & Associates NYC’s 2025 Q4 Manhattan Office Market Report shows leasing volume reached 11.6 million square feet in the fourth quarter, bringing full-year demand to 42 million square feet, up 7 percent over 2024.  Availability declined for the seventh consecutive quarter to 13.9 percent, while net absorption remained positive at 3.7 million square feet.

“The office recovery is no longer theoretical, it’s measurable,” said Todd Korren, Executive Managing Director and Director of Leasing at Lee & Associates NYC.  “Tenants are committing to space at scale again, and fundamentals continue to tighten across the borough.”

Class B Asking Rents Reach Record Highs in Midtown as Leasing Momentum Broadens Beyond Trophy Buildings

Class A space accounted for more than 71 percent of quarterly leasing, driven by major commitments including Moody’s 461,567-square-foot lease at 200 Liberty St. and Bloomberg’s 435,355-square-foot renewal at 120 Park Ave.

But one of the quarter’s clearest signals came from Class B performance.  In Midtown, Class B availability fell to 14.8 percent while rents rose to $55.65 per square foot and quarterly leasing surpassed 1 million square feet.  In Midtown South, Class B rents increased to $63.05 per square foot even as availability declined.  Borough-wide, Class B asking rents reached a record-high $68.61 per square foot.

“As prime supply tightens and new development remains limited, well-located Class B assets are capturing renewed attention,” said Korren.  “Owners who have reinvested are competing effectively and tenants are responding.”

AI and Tech Tenants Help Drive Momentum

Technology and AI-driven firms played a visible role in fourth-quarter momentum.  Downtown leasing nearly doubled quarter-over-quarter to 1.8 million square feet, 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 square feet, reflecting continued demand from fintech and AI tenants.

Lee & Associates’ Justin Myers and Dennis Someck completed a lease with AI company SceniX at 80 Eighth Avenue for 6,000 square feet.

“We’re seeing next-generation companies take meaningful space as they prioritize access to talent and high-quality environments,” said Justin Myers, Principal & Executive Managing Director.  “That demand is reinforcing pricing and reducing availability in multiple submarkets.”

Conversions Reshape Supply, Reinforce Market Tightness

Office-to-residential conversions and limited new office development continue to reshape Manhattan’s long-term supply picture.  With millions of square feet under construction and additional assets exiting inventory, overall availability continues to compress.

Midtown availability fell to 13.5 percent, its lowest level since 2020, while Downtown tightened to 14.1 percent.  Midtown South recorded its sixth consecutive quarter of declining availability, falling to 15.0 percent.

“As conversions permanently reduce certain segments of supply, the remaining competitive inventory becomes more valuable,” said Korren.  “That dynamic is contributing to rent growth and stronger positioning for quality assets across multiple vintages.”

Pricing Reflects Structural Improvement

Average Manhattan asking rents rose to $75.80 per square foot in Q4, with Class A averaging $87.54 per square foot.  Office visitation also strengthened into year-end, reaching roughly 81 percent of December 2019 levels.

“The consistency of tightening across Midtown, Midtown South and Downtown points to a healthier and more balanced market,” according to Woody King, Senior Managing Director.  “Heading into 2026, the conversation has shifted from stabilization to positioning.”