- Manhattan office availability dropped to its lowest level since January 2021, signaling a tightening market.
- Sublet inventory has fallen 37.2% since its 2023 peak, reaching the lowest level since mid-2020.
- Modern office buildings built after 2000 lead demand, with availability at just 8.5% in Q2 2025.
- Leasing activity hit 20.63M SF in H1 2025, on pace for the strongest year since the pandemic began.
Office Market Turns A Corner
After years of pandemic-era sluggishness, Manhattan’s office market is gaining traction, reports GlobeSt. According to a new report by Colliers, overall office availability has declined to its lowest point in more than four years. The drop is being driven by two key factors: shrinking supply and recovering demand.
Sublets In Retreat
One of the most notable shifts has been in sublease inventory. It dropped from a high of 22.12M SF in March 2023 to 13.89M SF in Q2 2025. That marks a 37.2% reduction. It marks the lowest level of sublet availability since July 2020. Midtown South led the recovery, with availability falling 14.1% to 3.66M SF, returning to pre-pandemic norms.
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Newer Buildings Outperforming
Leasing is increasingly concentrated in modern, high-quality buildings. Offices built after 2000 reported an availability rate of just 8.5%, down from 12.9% a year earlier. That compares to 17.1% for post-1980 buildings, 14.5% for post-war properties, and 17.5% for pre-war assets—highlighting the market’s flight to quality.
Demand Surges In H1 2025
Tenant demand is surging. Leasing volume reached 20.63M SF in the first half of 2025, on pace to break the 40M SF threshold for the first time since the pandemic began. The first quarter alone logged 11.39M SF in new leases, the busiest Q1 since 2014.
Concessions Narrow, Rents Edge Higher
While rents are rising modestly, landlords are starting to pull back on tenant concessions. After a year of little change, tenant improvement allowances and free rent have dipped 11.1% so far in 2025. Compared to the same time last year, this shift signals that negotiating power is slowly returning to landlords.
Why It Matters
The decline in availability and resurgence in leasing activity marks a potential inflection point for Manhattan’s office sector. While overall availability remains more than 50% above pre-pandemic levels, the gap is narrowing. The data suggests that while older assets continue to lag, demand for newer, amenity-rich offices is driving a healthier—if uneven—recovery.
What’s Next
If current leasing trends hold, Manhattan may log its strongest annual performance in office leasing since 2019. But the recovery remains bifurcated. Owners of aging buildings continue to face headwinds, while trophy assets and newer construction are increasingly commanding a premium.
