- Midtown availability fell to 27.7M SF in the third quarter, matching March 2020 and making it the first New York submarket to recover all of its pandemic occupancy losses.
- Midtown’s average asking rent reached $85.08 per SF, up 5.4% year over year, while Class-A asking rents across Manhattan hit a record $85.45 per SF.
- AI firms leased nearly 1.1M SF in Manhattan in the third quarter, while Downtown lagged with leasing 21.7% below its five-year quarterly average, showing recovery remains uneven.
Available office space in Midtown fell to 27.7M SF by the end of the third quarter, matching the figure from March 2020, according to a Colliers report cited by Bisnow.
That makes the Midtown office market the first New York submarket to recover all of the occupancy losses caused by the pandemic.
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Rents Hit Records
Tighter supply has helped Class-A owners push asking rents to an all-time high of $85.45 per SF across Manhattan.
Midtown’s availability rate fell to 11.9%. Its average asking rent reached $85.08 per SF, up 5.4% year over year.
That marks Midtown’s fastest annual third-quarter increase since 2014.
Leasing Keeps Pace
More than 10M SF of leases were signed across Manhattan. As a result, the market remains on pace for its busiest year since 2000.
Proskauer Rose signed the quarter’s largest deal. The law firm expanded by 478K SF at 11 Times Square.
“Rents are rising across the board,” SL Green Director of Leasing Steven Durels said at the Bank of America Global CEO Real Estate Conference last month. “They’re not limited to just the high-end part of the market.”
Midtown South and the AI Effect
Midtown South also posted a record. The submarket recorded 4.8M SF of leasing, the most for any third quarter.
Anthropic’s 466K SF full-building lease at 330 Hudson St. helped drive the total.
Meanwhile, AI firms took nearly 1.1M SF of Manhattan office space in the quarter. That compares with 800K SF in the second quarter and 790K SF in all of 2025.
Zooming Out
Downtown lost momentum. The submarket signed 850K SF of leases, 21.7% below its quarterly average over the past five years.
Meanwhile, Manhattan’s overall availability rate fell 2.4% between July and October. It reached 12.4%.
CRE Daily previously covered Midtown availability returning to its pre-pandemic level.
Why It Matters
Landlords are firmly in the driver’s seat. Strong tenant demand is helping them regain pricing power.
At the same time, office-to-apartment conversions have reduced available space. Together, these trends have ended the yearslong rise in tenant concessions.
As a result, owners have more room to push rents.
“As we enter the final quarter of the year, the market is beginning a new chapter after achieving several critical recovery milestones,” Colliers Executive Managing Director Franklin Wallach said.
What’s Next
Watch whether Downtown can close the gap with Midtown and Midtown South as the year ends.
Also watch whether AI-driven leasing continues at the pace set in the second and third quarters.
