Once written off by skeptics, New York City’s office sector is staging one of its most dramatic rebounds in nearly two decades. Manhattan is now leasing more office space than at any point since before the pandemic — and at rents approaching record highs.
Leasing Volumes Are Surging
During the first nine months of 2025, tenants signed leases totaling 23.2 million square feet of office space in Manhattan — the highest level in nearly 20 years.The pace now exceeds pre‑pandemic benchmarks, illustrating a full‑scale revival.
Premium Real Estate Is Commanding Premium Rents
More than 143 leases have crossed the $100‑per‑square‑foot threshold this year — already surpassing the full‑year 2024 total. Today’s tenants often must choose between the best location or best building quality — both rarely come together.
Strong Return‑to‑Office Momentum
New York now leads major U.S. metros in return‑to‑office rates. In July, workplace attendance was 1.3% higher than July 2019, thanks to the city’s dense transit network and compact business districts.
Anchor Tenants & Marquee Developments
Major 2025 Transactions:
10 Grand Central (Marx Realty) — 35 stories, fully leased after a hotel-style overhaul; rents reportedly up 4x in 12 months.
590 Madison Ave — RXR’s $1.1 billion acquisition of the former IBM Tower.
1345 Sixth Ave — Blackstone’s return to office with a 46% stake and $850 million CMBS refinancing.
625 Madison Ave — Related Companies exploring a pivot to an “AA-class” office tower from residential.
Seagram Building (375 Park) — RFR Holdings invested $30 million in upgrades; now fully occupied at mid-$200s PSF.
292 Madison Ave — 60 Guilders & Sentry Realty acquired for $90 million ($450 PSF).
1370 Broadway — Same buyers added another $75.5 million purchase.
343 Madison Ave — BXP advancing a 46-story tower with an anchor tenant LOI for 30%.
Former Brooks Brothers Site — SL Green in contract for $160 million; potential 800,000 SF tower.
Paramount Group Portfolio — Rithm Capital’s $1.6 billion takeover of 9 million SF of Class A NYC office.
Even more bullish: One Vanderbilt, Hudson Yards, and Manhattan West are nearly full — and Grand Central vacancy has dropped below 10%.
Top 5 NYC Office Leases of 2025 (So Far):
- NYU — 770 Broadway | ~1.1M SF | Long-term master lease.
- Jane Street Capital — 250 Vesey St (Brookfield Place) | ~1M SF renewal + expansion.
- Amazon — 10 Bryant Park | 330K SF.
- Mayer Brown — 1221 Ave of the Americas | 331K SF renewal + expansion.
- KnitWell Group — 7 Times Square | 246K SF renewal + expansion
Deloitte committed 800,000 sf at 70 Hudson Yards. JPMorgan Chase launched a $3 billion, 60‑story headquarters with gardens, wellness amenities and top‑tier retail. Developers have green‑lit more than half a dozen new office projects — the most since the pandemic began.
Looking Ahead
Additionally, Citadel’s decision to take both an equity stake and more than 850,000 square feet of space sends a powerful signal that top-tier firms are reinvesting in New York as a global business hub. Together, the partnership’s $4.5 billion bet on 350 Park Avenue embodies the city’s broader resurgence - where confidence, capital, and ambition are once again reshaping the skyline.
Recovery Beyond Trophy Buildings
Class B assets — once slower to rebound — have clawed back about 10% of their lost occupancy, roughly five times the national average for similar properties. Simultaneously, older and more obsolete buildings are being converted into residential or mixed use, further reshaping the inventory.
Residential Conversions: Reshaping the Class B/C Landscape
Office‑to‑residential conversions are removing significant portions of Class B and Class C office stock — particularly older, under‑performing buildings. While these conversions support the city’s housing supply, they also reduce affordable office options, potentially pushing rental rates upward for the remaining inventory.
Risks & Headwinds
Manhattan’s office market continues to face challenges, with overall vacancy holding steady at around 14.8%, nearly double the roughly 8.2% recorded in late 2019. This persistent vacancy reflects both structural changes in office demand and broader market uncertainties. Policy uncertainty further clouds the investment outlook, as the upcoming mayoral election could introduce regulatory shifts such as changes to taxes, zoning rules, or rent regulations. These potential adjustments may influence investor confidence and slow decision-making. Rising capital costs and macroeconomic pressures also weigh on the market. High interest rates and broader economic uncertainty can delay development projects and temper tenant expansion plans, creating additional headwinds for the office sector. Meanwhile, the ongoing conversion of older office buildings to residential or other uses is reducing the supply of lower-grade office space. This loss of budget-friendly office inventory can distort rent benchmarks and limit options for cost-conscious tenants.
What It Means — And What To Watch
New York City continues to set the tone for the broader office market, with Manhattan’s revival outpacing other U.S. markets and positioning the borough as a national bellwether. This momentum highlights the city’s enduring appeal to tenants and investors alike. As supply tightens and competition intensifies—particularly for top-tier office space—upward pressure on rents is expected. High-quality properties with modern amenities are increasingly in demand, driving rental growth and reshaping tenant expectations. The importance of quality and differentiation has never been greater. Buildings that fall short of modern standards, whether in wellness features, technological infrastructure, or flexible layouts, risk being left behind as tenants prioritize spaces that support productivity, health, and innovation. At the same time, the conversion of older office buildings into residential or mixed-use developments is reshaping neighborhoods and altering the real estate ecosystem. These transformations influence district dynamics, impacting both commercial activity and local housing supply. Investors will also keep a close eye on the next mayoral administration, looking for signals regarding pro-development or pro-housing policies that could affect zoning, regulation, and long-term investment strategy.
Adapted from the article: “The Big Comeback: NYC’s Office Market Roars Back in 2025” by Daniel Kaufman, InsiderFinance Wire
