The freefall in Manhattan office values is easing, but don’t call it a comeback just yet.
In the first quarter, Manhattan offices traded at a median decrease of about 26 percent compared to their prior sale prices, according to an analysis by The Real Deal.
The losses are still steep, particularly as the median appreciation since 2015 is about 8 percent. Still, they are far less severe than in recent years: the median discount was about 51 percent in 2025 and 2024; The median change for an office trade has not been in the green since 2021, when the improvement was 15.3 percent, according to TRD’s analysis.
The collapse was driven by a now-familiar culprit: remote work’s staying power, which gutted demand and forced landlords into a yearslong scramble to reposition aging office stock. Office landlords since then have been working to reposition their properties, from bolstering amenities to flipping them into residential properties.
“We are objectively past the bottom of the office market,” said Chris Varjan, executive managing director of investment sales at Lee & Associates NYC. “Values are way off peak still, but they’re better than they were.”
To gauge how the market has cooled — or hasn’t — TRD looked at recorded deeds classified as office or with a large office component, including for any sales that stemmed from foreclosure or bankruptcy cases, over the past 10 years, along with properties’ prior trades. All prices were adjusted for inflation; the earliest prior sales were from 2005, and inflation has risen some 70 percent since then.
Investors are more willing to put money into office buildings in Manhattan than they have in recent years. Though borrowing costs are elevated, they have been relatively stable for years, according to brokers interviewed by TRD.
People have also become more accustomed to the hybrid work environments that once left offices fully vacant, said Dylan Kane, a managing director in the capital markets group at Colliers.
There is “more certainty and more comfort,” he said. “And we all know transactions occur when you have a pretty good idea where values are.”
The reset may finally be making its way through the system. In Manhattan, early signs of stabilization are emerging. Led by strong demand for premier spaces, leasing started the year on a high note as many employers continue to urge their workers to return to the office on a more regular basis.
“The water level is rising across the board on rents, which is helping values,” Varjan said.
Subscribe to TRD Data to see this content!
Soho was home to the property with the highest price appreciation so far this year — 158 Lafayette Street. The office building sold in February for $15.3 million, up more than 260 percent from its prior trade in November 2024, when it sold via a foreclosure case for $4.2 million. The property had been a stalled construction site and in receivership for years before its 2024 sale.
The neighborhood has seen a slate of deals so far this year, and some buildings in Soho are able to command top-tier rents, Varjan said, adding that the price per square foot is materially higher than anything else in the market because of strong retail.
Not all buildings in the area appreciated — Soho was also home to the office building that had the greatest drop in price appreciation so far this year. A Blackstone affiliate purchased 113 Spring Street for $42.8 million from Morgan Stanley, which bought the property in 2015 for $68 million, or, in today’s dollars, about $95 million, representing a roughly 55 percent drop.
Though Manhattan’s office market is gaining steam, the recovery is uneven. Trophy office properties are likely to see better pricing than lower-tiered buildings, where concession packages may be dragging down rents.
“It’s a completely different … calculus if it’s a Class B building,” Kane said.
Though the first quarter did not see a flurry of deals close, Varjan has high hopes for the rest of 2026. The rezoning of Midtown South, which allows for more residential development in the neighborhood, has caused many landlords to put their aging office stock on the market.
“There’s plenty of defunct buildings or antiquated buildings in the Garment center that are going to go the same way as land,” he said. “So, yeah, I am expecting, by the end of the year, more trades than we saw last year.”