- Manhattan leased about 4.5 million square feet in October, and year-to-date leasing topped 37 million, putting 2026 on pace for roughly 44 million, according to Colliers data cited by The Real Deal.
- Finance and law firms drive the biggest deals while AI tenants leased over 1 million square feet in Q3, and no major new tower has opened since One Vanderbilt in 2021.
- The recovery is concentrated in trophy buildings, with record rents at the top and tenant improvement allowances above $90 per square foot, so uncertainty over AI valuations and rates still looms.
Manhattan is heading for its best year of office leasing since 2000, according to The Real Deal.
Asking rents have returned to pre-pandemic levels, and trophy buildings are trading and leasing at record prices.
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By the Numbers
Average asking rent reached nearly $80 per square foot in October, matching March 2020, according to Colliers. Tenants leased about 4.5 million square feet that month, up more than 50% from September.
Year-to-date leasing topped 37 million square feet, which puts the market on track for around 44 million by year-end. That would still trail the 50 million square feet leased in 2000.
Who’s Driving It
Finance and law lead the way. Wall Street profits reached nearly $46 billion in the first half, and Simpson Thacher’s 916,000-square-foot lease at 570 Fifth Avenue is the year’s largest. October added Morgan Lewis at 205,000 square feet at 1251 Sixth Avenue and a 171,000-square-foot Seward & Kissel renewal.
AI tenants leased more than 1 million square feet in the third quarter, a record, almost all of it in Midtown South. Anthropic took an entire building at 330 Hudson Street, and Ramp keeps growing at 28-40 West 23rd Street.
The mix differs from the dot-com era. Today’s tenants are better capitalized and more measured, and JLL’s research director has said AI office leasing carries little bubble risk nationally.
Squeezed Supply
Manhattan has not seen a major new office building since One Vanderbilt opened in 2021, apart from JPMorgan Chase’s headquarters, and the next wave is not due until around 2030. Thirteen major conversion projects will turn more than 7 million square feet of office into over 11,000 apartments.
Availability fell to just over 12% in October, the lowest since 2020. Our earlier brief on 12.6% vacancy showed the same direction for the third quarter.
Record Rents, Uneven Gains
Castle Hook Partners agreed to pay up to $21.2M a year for a 53,000-square-foot penthouse at 625 Madison Avenue, potentially a Manhattan record at $350 to $400 per square foot. A $327.50-per-square-foot deal at 9 West 57th Street came earlier this year.
Class A asking rents topped $90 per square foot in the third quarter, a record. SL Green raised its annual earnings guidance by more than a quarter, and One Vanderbilt is fully leased.
Not everyone is winning. Tenant improvement allowances topped $90 per square foot in the first half, an all-time high, largely from smaller, lower-rent deals, while trophy incentives have eased from 2024 peaks.
Why It Matters
Scarcity is giving landlords with the right buildings real pricing power, and conversions keep removing supply. The recovery remains heavily concentrated in top-tier assets.
What’s Next
The 2000 boom ended in a bust. This cycle’s risks include AI valuations, inflation and volatile interest rates, so the question is how much runway is left.
