Manhattan Office Leasing Roars Back To Pre-Pandemic Pace

Manhattan office leasing closed out last year like it was 2019, posting its strongest quarter since before the pandemic.

Demand surged, availability tightened and rents pushed higher across much of the city, according to Colliers data. Leasing activity jumped more than 25 percent quarter-over-quarter to 11.9 million square feet, the borough’s most active quarter since late 2019.

“The year 2025 will be remembered as a watershed moment in the Manhattan office market’s recovery,” said Colliers’ Franklin Wallach, one of the report’s authors.

For the full year, tenants inked nearly 42 million square feet of deals, the highest yearly total since 2019, when the borough notched almost 43 million square feet of leasing. That marks a 26 percent increase from 2024.

The burst of activity in the fourth quarter was fueled by a handful of big deals. Bloomberg renewed nearly 496,000 square feet at Global Holdings’ 120 Park Avenue, Moody’s signed a 460,000-square-foot lease at Brookfield Properties’ 200 Liberty Street and Millennium Management extended its 438,000-square-foot footprint at 399 Park Avenue. Class A buildings captured more than 74 percent of leasing volume, continuing the market’s flight-to-quality trend.

Tenant demand translated into tightening conditions. Manhattan’s availability rate fell to 13.9 percent, down 70 basis points from the prior quarter and marking the seventh straight quarter of stable or declining availability, the longest streak since 2007. Sublet space also continued to shrink, with availability falling to its lowest level since 2019.

Rents crept higher in turn. The average asking rent climbed to $76 per square foot, up 1.5 percent from the third quarter and the highest level since October 2020. Class A asking rents rose to $83 per square foot, while Class B rents hit a record high of almost $69 per square foot.

Midtown led the borough in leasing volume, posting 5.3 million square feet of deals in the quarter, while Midtown South logged its strongest quarter since 2019. Downtown leasing more than doubled from the prior quarter, helped by large leases from Moody’s, the New York State Attorney General’s Office and Stripe.

Financial services, insurance and real estate firms (FIRE) were the most active tenants, accounting for 37 percent of leasing activity boroughwide, followed closely by TAMI (technology, advertising, media and information) companies.

Still, Wallach cautioned that the market has only worked through about half of its post-pandemic excess supply.