- Manhattan trophy office vacancy fell to a cycle-low 4.9% as 23 leases topped $250 per square foot this year, 11 of them above $300.
- Third and Lexington avenues posted the fastest Midtown lease-count growth from 2021 to 2025, and Third Avenue is on pace to beat its full-year 2025 activity.
- Total vacancy dropped to 12.6% from 14.7% a year earlier while the pipeline stays largely preleased, leaving landlords with pricing power until new deliveries arrive after 2031.
Manhattan’s trophy office vacancy has fallen to a cycle-low 4.9%, and tenants are starting to look beyond the premium buildings they once targeted, according to JLL’s Q3 2026 New York office research.
With top-tier space scarce and rents setting records, Third and Lexington avenues are drawing a growing share of Midtown leasing.
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Trophy Space Runs Short
JLL counted 23 Manhattan leases above $250 per square foot this year, and 11 of them topped $300. Castlehook committed to $375 per square foot at 625 Madison Avenue, and Sentinel signed at $345 per square foot at One Vanderbilt.
Trophy asking rents average $137.09 per square foot, and combined Trophy and Class A space averages $95.87. Overall direct asking rent reached $84.56, up from $80.72 a year earlier.
Tenants Test Other Corridors
Lexington and Third avenues posted the fastest lease-count growth among Midtown avenues from 2021 to 2025, at 28.6% and 18.4% annually. JLL says Third Avenue is on pace to pass its full-year 2025 activity before year-end.
JLL attributes the shift to tenants broadening their searches as premium inventory dries up. Q3 absorption shows demand spreading out: Midtown Core lost 845,122 square feet, while Penn District gained 637,915 and Hudson Square added 844,046.
Leasing Stays Broad
Leasing volume hit 6.9 million square feet in Q3, bringing the year-to-date total to 25.7 million, up 2.3% from 25.1 million through Q3 2025. Law, tech and financial services drove activity.
Anthropic took 462,000 square feet at 330 Hudson Street, Proskauer Rose renewed 413,000 square feet at 11 Times Square, and Snapchat subleased 199,000 square feet at 2 Penn Plaza.
Total vacancy fell to 12.6% from 13.1% in Q2 and 14.7% a year ago, the lowest level since before 2020. The drop fits a pattern in which Midtown office availability has already returned to pre-pandemic levels.
Why It Matters
Landlords hold pricing power at every tier, with rents rising across building classes and concessions falling, per JLL. Tech tenants add to the squeeze as AI office leasing grows.
Tenants priced out of trophy towers have fewer premium options, and that pressure is what pushes demand toward secondary avenues and submarkets.
JLL’s view is that Manhattan is short of supply rather than peaking. The firm says the construction pipeline has shrunk 80% and the next wave of deliveries is not expected until after 2031, with capital flowing away from office.
What’s Next
The development pipeline stands at 9.7 million square feet after construction began at the Citadel-led 350 Park Avenue, and 60.9% of it is preleased. Owner-occupied and pre-committed projects mean the competitive supply reaching the market will be far smaller than that headline, JLL notes.
Preleasing at 625 Madison Avenue includes General Atlantic at 152,000 square feet and Veritas at 90,000 square feet.
If Q4 leasing holds, JLL expects full-year volume to approach 2025 levels. It also expects vacancy to tighten further before new deliveries arrive, as large blocks of high-quality space get harder to find.
