April 2, 2025
- Year-to-date leasing activity saw its strongest start since 2014, with February’s leasing volume soaring 53% above the five-year monthly average.
- Downtown recorded its best leasing performance in 5 years while Midtown South marked its best net absorption in 10 years.
- Top lease transactions include renewals and expansions of a trading firm, clothing brand, and healthcare provider.
A Promising Start to 2025
Manhattan’s office market is experiencing a strong resurgence in early 2025, with leasing activity off to its best start since 2014. February alone saw 2.52 million square feet leased, an impressive 53% jump above the five-year monthly average of 1.65 million square feet. This surge pushed year-to-date leasing activity to 5.13 million square feet, marking a 49% increase from the previous year. Such robust demand highlights the market’s ongoing recovery and the sustained interest from tenants seeking prime office spaces.
Renewal activity further underscores this positive trajectory, with 615,000 square feet renewed in February, bringing the year-to-date total to 955,000 square feet. Additionally, the market’s availability rate saw a notable decline, dipping 10 basis points from the previous month to 18.4%—a full 180 basis points lower than a year ago. Positive net absorption of 1.31 million square feet in 2025 thus far further strengthens confidence in Manhattan’s office landscape. Meanwhile, rental rates remained stable, with the average asking rent at $77.20 per square foot, mirroring figures from both the prior month and the previous year. The sublease market also saw improvement, with availability dipping to 3.8%.
In February, the top lease transaction in Manhattan was Jane Street Group, LLC’s 983,791 sq. ft. renewal and expansion at 250 Vesey Street in Downtown. The next four biggest transactions were in Midtown, including Amazon’s 192,733 sq. ft. sublease at 237 Park Avenue and Mizuho Corporate Bank’s 151,409 sq. ft. sublease at 1285 Avenue of the Americas. Additionally, both renewing and expanding were Garan, Inc. with 73,017 sq. ft. at 99 Park Avenue and Northwell Health with 52,963 sq. ft. at 130 E 59th Street.
Downtown Manhattan: Busiest Month in 5 Years
The Downtown Manhattan office market saw its most active leasing month since December 2019, with 864,000 square feet leased in February—an astonishing 287% above the five-year average. This propelled year-to-date leasing to 1.18 million square feet, a remarkable 174% rise from the previous year. Renewals also played a significant role, totaling 369,000 square feet for the month and bringing the 2025 tally to 446,000 square feet.
Despite this leasing boom, net absorption remained in negative territory at -140,000 square feet for February and -236,000 square feet year-to-date. Negative net absorption means that more space is being vacated than occupied. Accordingly, the availability rate inched up 10 basis points to 21.5%, a slight increase in available office space from the previous month. This contributed to steady asking rents at $56.47 per square foot. Sublease availability also increased slightly to 6%, as the sublease rental rate dipped 2% from last year to $45.84 per square foot.
Midtown South: Best Net Absorption in 10 Years
Midtown South’s office market is off to its best start in over a decade, with net absorption reaching a year-to-date high of 420,000 square feet. Leasing activity remained steady at 337,000 square feet in February, matching the five-year monthly average. Year-to-date leasing surged 63% from the prior year to 885,000 square feet, indicating strong tenant demand.
The availability rate declined by 10 basis points to 22.3%, down 40 basis points from a year ago. Also, renewal activity was limited, with no new deals in February and a modest year-to-date total of 19,000 square feet. Asking rents remained stable at $84.42 per square foot, with sublease availability also decreasing to 3.2%. These figures suggest a steady market with encouraging signs of recovery.
Midtown Manhattan: Lowest Availability Since 2021
Midtown Manhattan’s office sector demonstrated substantial momentum, with leasing activity totaling 1.32 million square feet in February, exceeding the five-year monthly average by 21%. This drove year-to-date leasing activity to 3.07 million square feet, reflecting a 24% increase from the previous year. Renewals added another 246,000 square feet for the month, bringing the total to 489,000 square feet for 2025.
Availability saw a significant improvement, falling to 16.1%—the lowest level since January 2021—and down 220 basis points year-over-year. Net absorption was a strong 428,000 square feet for February, contributing to a year-to-date total of 1.13 million square feet. Asking rents held firm at $83.35 per square foot, while the sublease availability rate dipped to 3.3%. The sublease asking rent even saw a slight increase, up 2% from the prior year to $62.40 per square foot, signaling stabilized demand.
2025: Positive Track for Manhattan’s Office Market
Looking ahead, the Manhattan office market appears poised for continued improvement. The robust leasing activity in early 2025 suggests that businesses are re-engaging with office space at levels not seen in over a decade. Declining availability rates, coupled with sustained asking rents, indicate a more balanced supply-demand dynamic. While certain submarkets, such as Downtown Manhattan, continue to grapple with absorption challenges, the overall trajectory remains optimistic.
If leasing momentum continues at this pace, Manhattan could witness one of its strongest office market rebounds in years. With companies re-evaluating their space needs and making long-term commitments, stability and gradual growth seem likely. Investors, landlords, and tenants alike should find confidence in the resilience of the city’s office landscape as it adapts to evolving work environments and economic conditions.
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Reference:
Manhattan Office Figures March 2025, CBRE
