- Office availability in Manhattan has dropped to 14.7%, its lowest level since 2021, though still above pre-pandemic norms.
- Trophy and Class A offices are driving demand, while Class B buildings continue to see high vacancy and limited leasing activity.
- Residential conversions are helping absorb excess space, with over 15M SF removed from the office market.
- New office developments are leasing quickly, showing strong tenant interest in high-end, amenity-rich buildings despite high construction costs.
A Record Leasing Year, But With Caveats
Manhattan’s office market is showing signs of strength in 2025, reports Commercial Observer. Leasing activity reached 21.1M SF in the first half of the year. That figure is just shy of the 2014 record and is on pace to surpass even 2019’s pre-pandemic levels. The trend continued into the summer with several major deals. Paul, Weiss expanded by 849,672 SF at 1345 Avenue of the Americas. Verizon also signed a 203K SF lease at Penn 2.
Availability Rates: Down, But Not Out
Despite the leasing momentum, Manhattan’s office availability rate is falling slowly. It dropped from 15.4% in Q1 to 14.7% more recently, still far above the 11.7% rate from 2019. Class A and trophy assets—roughly the top 15% of the market—are leading the recovery, with trophy office availability already near pre-pandemic levels at 10%. Class B buildings, however, are stuck around 16.8%, creating a bifurcated market.
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Location Matters
Availability also varies significantly by neighborhood. Midtown sits close to the citywide average at 14.8%, while Lower Manhattan lags at 21.9%. Hudson Yards is thriving with a tight 8.8% availability rate, while adjacent Chelsea struggles at a whopping 30.2%. Experts point to Chelsea’s Class B-heavy inventory and challenging commuter access as major factors.
Conversions, Not Construction
With demand heavily favoring high-end spaces, underperforming Class B offices are increasingly being removed from the market. As of July, 15.2M SF of office space in NYC has been or is being converted into residential, which could eventually offset more than one-third of the post-pandemic occupancy losses in lower-tier buildings.
High Demand, Low Supply—For New Product
Though new construction is limited due to financing and zoning hurdles, several high-profile developments are making headway—and attracting tenants early. Projects like Related’s 70 Hudson Yards and BXP’s 343 Madison are already signing major anchor tenants before completion. These early leases are expected to have minimal impact on future availability, as the space is being absorbed quickly.
Looking Ahead
Experts expect the office availability rate to continue its slow decline. If current leasing trends hold, Manhattan could dip below 13% availability within the next year. However, the market’s recovery remains uneven, with tired, underinvested buildings continuing to weigh on the broader landscape.
Political uncertainty looms with NYC’s upcoming mayoral race. However, market analysts note that the office sector has historically weathered leadership transitions. They point to strong leasing activity under past administrations that initially raised concerns.
Bottom Line
Manhattan’s office market is rebounding—but unevenly. Trophy buildings and new developments are thriving, while Class B spaces continue to drag down overall availability. The path back to pre-pandemic levels will be slow and selective, but it’s moving in the right direction.
