Leasing Surge: Manhattan Office Activity Nears Pre-Pandemic Levels

Manhattan’s office market is showing serious momentum again. After several sluggish years, leasing activity is back on track to surpass 40 million square feet for the first time since before the pandemic. October was especially active, led by major commitments at Hudson Yards and Midtown. Here’s a breakdown of what’s driving the rebound, which sectors are leading the charge, and what landlords and investors should take away from the latest data.

Leasing Volume Accelerates

Manhattan recorded a busy October that capped a strong year-to-date run for office leasing. Roughly 30 million square feet of space has been leased through the third quarter, setting the stage for the market to break the 40 million square-foot threshold by year-end if current trends continue.

Leasing activity in recent months has hovered around 3.5 to 3.7 million square feet per month, well above the long-term average. This pace reflects tenants regaining confidence in long-term office commitments.

What’s Fueling the Uptick

1. Flight to Quality
Tenants continue to gravitate toward newer, amenity-rich buildings. Properties like The Spiral in Hudson Yards and One Vanderbilt in Midtown are outperforming the rest of the market as large firms secure modern space that supports hybrid work.

2. Reduced Sublease Supply
Sublease availability has dropped to its lowest level since 2020, tightening the overall supply pipeline. This reduction in excess space is helping stabilize rent levels and strengthen landlord leverage.

3. Return-to-Office Momentum
Firms in law, finance, and tech are expanding or renewing as in-person work stabilizes. Ropes & Gray’s lease extension and Sixth Street’s new sublease at The Spiral were among the most notable October deals, signaling steady demand from high-credit tenants.

What This Means for Landlords and Investors

Landlord Leverage Strengthening:
Rising demand for premium office space is giving Class A landlords renewed pricing power, reducing the need for heavy concessions.

Older Buildings Face Pressure:
Owners of Class B and C properties will likely continue facing vacancies and rent compression unless they reposition assets or upgrade amenities to compete with newer towers.

Value-Add Opportunities Emerging:
With leasing momentum improving, investors may find discounted acquisitions or recap opportunities in older stock that can be repositioned for the new era of office demand.

 

Manhattan’s office market is far from its pandemic lows. The return of big-ticket leases and shrinking sublease inventory point to a healthier, more balanced environment for landlords. If momentum holds through year-end, surpassing 40 million square feet of leasing would confirm that Manhattan’s office rebound is real — and that prime assets are once again leading the charge.