More evidence is in that office leasing in Manhattan, the largest U.S. market for that property type, hit its best year since before the pandemic, led by demand for top-tier workspace.
In 2025, Manhattan’s total office leasing rose more than 25% from a year earlier to 41.92 million square feet, according to a Colliers study released Friday, just 2.4% shy of the 2019 total of 42.97 million square feet and more than any year from 2020 to 2024.
In Midtown Manhattan, a district that includes the corporate headquarters-heavy Park Avenue corridor by Grand Central Terminal, last year’s total of 19.32 million square feet of leased office space topped even the pre-pandemic level and was the highest yearly total since 2018, Colliers said.
That's in line with preliminary year-end findings published a day earlier, on Thursday, by CoStar that shows total new leasing in Manhattan last year posted its strongest showing since 2019, helped by late blockbuster deals including Moody’s planned relocation within Lower Manhattan to Brookfield’s 200 Liberty St. in a deal spanning 460,000 square feet.
The strong finish in 2025 came after demand last quarter rose about 16.3% to 11.9 million square feet, making it Manhattan’s strongest single quarter since the fourth quarter of 2019, Colliers said. The average asking rent last quarter rose 3.5% from a year earlier to $76 per square foot, the market’s highest average since October 2020. The quarterly asking rent average increased in all but five of Manhattan’s 18 office clusters, Colliers said.
The fourth-quarter availability rate also declined, to 13.9% from 16.5% a year earlier and from 14.6% in the third quarter, the seventh straight quarter of a lower or stable availability rate, according to Colliers. That marked the longest such stretch since 2007.
“The year 2025 will be remembered as a watershed moment in the Manhattan office market’s recovery,” said Franklin Wallach, executive managing director of research and business development for Colliers in New York, in a statement. “Tenant demand practically matched the pre-pandemic volume while supply has tightened for the longest continuous quarterly period in nearly twenty years.”
Sublet inventory last year also fell below the March 2020 benchmark, he said, adding there were also more $150-plus and $200-plus per-square-foot deals closed last year compared to 2019 with some office corridors seeing record-high asking rents.
To be sure, the positive scorecard aside, the Manhattan office market has only “shed half of its post-pandemic excess supply,” Wallach said. And in a telling sign of the flight-to-quality trend that’s been a dominant theme in office leasing in Manhattan and other markets, demand for Class A office stock grabbed a 74.2% share of the fourth-quarter leasing volume even as this type of top-tier office space represented only 64.4% share of the market’s inventory, the Colliers study found.
There are also more signs of the tech-sector leasing returning in Manhattan. While Manhattan’s financial services, insurance and real estate sector led fourth-quarter leasing by industry with a 37% share, the technology, advertising, media and information, or TAMI, services sector had the second-largest share of activity at 34%, followed by the professional services sector with a 14% share, Colliers said.