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Manhattan office leases rose more than 20% to 3.7 million square feet in July, well above the 10-year 2.72 million square feet, according to a new report from Colliers. If demand continues at the same pace for the rest of 2025, Manhattan’s annual volume will exceed 40 million square feet for the first time since 2019.
Over the past 25 years, on average, about 32 to 33 million square feet have been leased in certain years. In 2024, Manhattan returned to that average for the first time since the pandemic began in 2020.
“It’s a very strong market in terms of demand,” said Franklin Wallach, executive managing director of research and business development at Colliers.
“It’s certainly part of that, and the unemployment rate is low. There are also the re-emergence of some major industries that were a bit quieter during the pandemic, but technology comes to mind in particular,” Wallach said.
He pointed out more than 1 million square feet of Manhattan office leases on Amazon alone since November 2024. It came in the form of leases, subleases and corporate agreements with coworking spaces like WeWork, in addition to purchasing.
The legal sector is another major example. In 2023, Manhattan saw a record year of law firm leasing activities that exceed 4 million square feet. It was slightly lower last year, but still above the level of 2019.
“We also had flights to quality. There are new constructions like one Vanderbilt, Hudson Yard, Manhattan West, and more. There, the availability of that new product has become very strict,” Wallach said.
As a result, the supply known as the “availability rate” of new office space has dropped to 6.7% compared to the rate of older buildings at 17%. Manhattan’s overall availability rate fell to 15%, the lowest since January 2021 and the 18th consecutive month when its availability rate was stable or tightened.
Of Manhattan’s three office subsectors, Midtown, Midtown South and Manhattan in August remained stable downtown, tightening availability rates.
At the end of August, the average asking rent for a Manhattan office was $74.73 per square foot, up 1% since July. However, rents are still 6% lower than in March 2020.
“If it increases by 1% that month, that’s a significant move. Some of it has above-average priced space on the market, but we’re beginning to appreciate existing space,” Wallach said.
Office conversions have a major impact on both supply and price. Colliers has tracked about 9 million square feet of office space removed from the Manhattan market over the past four years. It’s not just about supply, but also about demand and price.
“We have seen, on average, lease activities occur on average for each million square foot office building that is scheduled for conversion, for tenants leaving that building and moving to another building,” Wallach said.
Additionally, the converted buildings had sub-average space, including sub-retail space, which was less expensive. Therefore, their removal will increase the average price across the Manhattan market.
