Manhattan's office sector has continued to show strong momentum in the post-pandemic world. Most notably, availability in the first three months of 2025 slipped by 240 basis points year-over-year to 17.3 percent, according to Avison Young. This is the lowest amount recorded since 2020.
"This drop came from a decrease in both direct and sublet available space, which currently sit at 72.0 msf and 16.4 msf, respectively," Avison Young wrote.
"However, when considering factors such as conversion candidates, property class, and other extenuating circumstances, the availability rate is even lower."
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Availability was the lowest in the Upper East Side, at 5.1 percent, followed by Midtown South's Meatpacking District, at 6.2 percent.
Also, leasing activity is strong, with 10.1 million square feet of deals completed, representing a 20.8 percent increase from the same period in the 12 months prior. Particularly large leases led the way, as there were 14 100,000 square feet foot-plus deals made, which was the highest first quarter amount since 2018. There was strong demand for leases in the financing, banking, insurance, and real estate sectors, which accounted for just under 50 percent of the total activity.
Lately, there's been a wave for higher quality assets. Of the leasing activity in the first quarter, trophy properties accounted for 61.6 percent of the deal share. Not only is that the highest levels seen in decades in Manhattan, but it's up nearly double from the 32.1 percent recorded in the same period a year ago.
"Landlords of trophy and trophy+ buildings are continuing to benefit from the flight to quality trend, with occupiers actively choosing pricier rents and competing for footprints in better quality buildings," Avison Young said.
In February 2025, office properties in Manhattan were 71.2 percent busy versus February 2019, well above the national average of 61.5 percent.
Annual direct asking rents are averaging $79.35 per square foot. Trophy prices were the highest at $121.61, with Class A's next on the list at $82.81.
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