NYC’s Office Market Sees Prices Roar Back

BY PETER GRANT

New York City’s office market is enjoying its biggest boom in nearly two decades, leaving the rest of the U.S. in its dust.

Businesses leased 23.2 million square feet of additional Manhattan office space during the first nine months of 2025, according to real-estate services firm CBRE Group. That is the largest amount of new workspace rented for that period in 19 years.

A combination of factors is fueling the recovery, from more New York workers heading back to the office regularly to the financial sector’s increasing appetite for more modern office space. Accounting and consulting company Deloitte signed one of the biggest leases this year when it rented nearly three-quarters of a new Hudson Yards skyscraper under development on Manhattan’s West Side.

Technology, media and advertising companies also gobbled up space this year, extending a recent run. Amazon.com, for one, expanded its New York presence by purchasing a Fifth Avenue building and leasing an additional 330,000 square feet.

New York is setting the pace for the rest of the country. Manhattan leasing activity in 2025 has now surpassed its 2018-2019 levels. Nationwide, office leasing remains about 11% below its prepandemic average, according to CBRE.

Competition for prime space in Manhattan has grown so intense that many large tenants have to choose between a great location or a top-quality building.

“In most other cities, landlords only wish they had that kind of problem,” said Michael Slattery, CBRE’s re-

search director for the New York region.

Manhattan developers are moving ahead with more than a half-dozen new office projects, the most at any point since the pandemic. They are encouraged by a record 143 leases signed so far in 2025 for more than $100 a square foot, already more than the total number signed at this level in 2024, CBRE said.

The city’s office-market resurgence owes much to the continued strength of its financial- services sector, a core engine of the city’s economy. Even as the broader U.S. economy shows signs of slowing, major banks are expanding payrolls to handle a rebound in dealmaking and initial public offerings.

New York also offers strategic advantages. Business districts from the Financial District to the Park Avenue corridor near Grand Central Terminal offer suburban workers a relatively easy train commute, and the city’s return- to-office rate is the highest in the country.

In July, office attendance in New York was 1.3% higher than it was in July 2019. That was tops among the 11 business districts tracked by Placer.ai. Nationwide, the return- to-office rate was still 22% below 2019, the firm said.

New York is especially attractive to the younger workforce that many employers are trying to attract. The city this year ranked first among U.S. metropolitan areas for attracting college graduates, according to a JLL report that analyzed close to 1.5 million new graduates entering office jobs.

“Early in the pandemic, New York was among the lagging group of gateway markets,” said Jacob Rowden, JLL’s senior manager of U.S. office research. “But in late 2021 and early 2022 that narrative started to shift.”

New York’s office market is far from fully healed. Manhattan’s vacancy rate stands at 14.8%, according to Co-Star, nearly double the 8.2% recorded in the final quarter of 2019. Many of its older and undistinguished buildings are obsolete or facing financial distress.

New York City office landlords also are bracing for next month’s mayoral election, which Democratic nominee Zohran Mamdani, a democratic socialist, is expected to win. Many real-estate executives worry his proposed rent freeze on rent-stabilized apartments and his plan to increase taxes on the wealthy will hurt the industry.

“What could disrupt [New York’s] recovery would be if we had an unwelcome climate for business and entrepreneurs,” developer Gary Barnett said.

Still, Barnett is developing a new office building by Grand Central Terminal that already counts IKEA as an anchor retail tenant.

Nearby, JPMorgan Chase’s recently opened Park Avenue headquarters is the most talked-about office tower in years. The $3 billion 60-story skyscraper includes 19 food operators, outdoor gardens and meditation rooms.

“Other corporations and their clients and employees are going to want a more comparable experience,” said Owen Thomas, chief executive of office developer BXP. “It’s elevating the expectation of what an office can be.”

BXP reached a tentative deal to lease one-third of its Midtown office development that is under way to global insurance and investment firm C.V. Starr, according to people familiar with the matter. Thomas declined to comment.

Beyond the gleaming new towers, New York is experiencing a recovery in its lesserquality office stock. New York’s so-called Class B buildings have clawed back about 10% of the 25 million square feet of occupancy they lost during the pandemic—five times the national rate of recovery for similar properties, CoStar said.

Many troubled and obsolete office buildings are finding new life as housing. Spurred by new city and state policies, Manhattan is going through one of its most active waves of office-to-residential conversions since World War II.

“Every neighborhood in New York is becoming a mixed-use neighborhood,” said developer Marty Burger, who is leading a group that is converting a midblock tower near the Empire State Building in midtown.