Manhattan Office Leasing Plunges 40% Amid Lack of Big Deals

Leasing volume fell to 2.23M SF in February as large office deals slowed sharply.

Nina Dale
March 11, 2026

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Good morning. A sharp drop in large transactions dragged down Manhattan’s office leasing activity in February. Still, rents continued climbing for the ninth straight month.

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Market Snapshot

Most Active Neighborhood

By Deal Count

Bedford-Stuyvesant

Properties Sold

All Asset Types

139

Transaction Volume

Sales Activity

$742.9M

Top Office Submarket

Avg Starting Rent

Park Avenue

$139.35 / SF

Manhattan Office Rent

Avg Effective

$76.92 / SF

Office Rent Growth

YoY Change

+4.8%

*Office metrics courtesy of CompStak; data from 11/01/25 to 1/31/26. Sales metrics courtesy of Actovia; NYC properties reported sold during the week of 2/27/26–3/5/26.

Leasing Pullback

Manhattan Office Leasing Plunges 40% Amid Lack of Big Deals

Manhattan’s office leasing momentum cooled sharply in February as the number of large deals dropped off.

Leasing activity slows: Manhattan recorded 2.23M SF of leasing volume in February, according to Colliers. That’s a 39.5% drop from January and 29.7% below February 2025, making it the lowest monthly demand since September 2024. Leasing also came in 19% below the 10-year monthly average of 2.76M SF.

Fewer large deals: The slowdown largely reflects the disappearance of major leases. January included six deals exceeding 100,000 SF, while February had only two, dramatically reducing overall transaction volume.

Submarket performance: Midtown South saw leasing volume fall more than 50% month over month. Downtown Manhattan struggled even more on an annual basis, with activity dropping 70% YoY.

Vacancy and absorption shift: The availability rate increased to 13.6%, rising 10 bps and marking the first increase in two years. Net absorption also turned negative, totaling -200,000 SF in February.

Rents still rising: Despite weaker demand, average asking rents climbed 0.3% to $77.22/SF, marking the ninth consecutive month of increases and the highest level since August 2020.

➥ THE TAKEAWAY

Big deals matter: Large deals continue to dictate Manhattan’s office leasing momentum. When they materialize, the market looks strong—but when they slow, underlying demand appears far more fragile.

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Around New York

➥ Investors are pulling back from rent-stabilized buildings as political pressure raises fears of tighter regulations.

➥ Plans for affordable housing at 375 Lafayette are sparking a clash between pro-housing advocates and preservationists.

➥ Hundreds of NYCHA apartments are reportedly occupied by squatters, exposing gaps in the housing authority's management of vacant units.

➥ A proposal to eliminate NYC’s long-standing sidewalk sheds is fueling debate over safety, construction, and streetscape clutter.

➥ MIT researchers developed a model tracking how pedestrians move through NYC, offering new insights for planners and retailers.

➥ Billionaires are leveraging NYC landmark rules to assemble and expand ultra-luxury megamansions under the cover of historic preservation.

➥ The push for housing at 375 Lafayette has ignited a preservation battle in one of Manhattan’s most historic neighborhoods.

Follow the Money

OFFICENOMAD SL Green continues signing AI-focused tenants in Manhattan, highlighting how the fast-growing tech sector is fueling new office demand.

RETAILQUEENS Vornado’s Steven Roth sold a former Queens department store to Northwell Health, reflecting the continued shift of retail properties toward medical use.

HEALTHCAREQUEENS Excelsior Care Group purchased a Queens nursing home in Flushing, expanding its healthcare real estate footprint in the borough.

OFFICEMIDTOWN WEST Manhattan Community Board 4 signed a lease for office space at 630 Ninth Avenue, securing a new base in Midtown West.

RETAILQUEENS A Queens retail property managed by Vornado’s Alexander’s was sold to Northwell Health as healthcare users increasingly repurpose retail sites.

OFFICEMANHATTAN New York City office investment jumped 34%, marking the sector’s strongest activity since before the pandemic.

MULTIFAMILYBROOKLYN A multifamily portfolio tied to investor Zalmen Wagschal has been sent to special servicing as financial pressures mount.

📈 CHART OF THE WEEK

NYC effective rents climbed steadily to about $3,190 in 2026, but annual growth has cooled to roughly 2–4% after the post-pandemic spike, signaling a more moderate rent growth phase.

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