the staff of the Ridgewood blog
NEW YORK, NY — Manhattan’s commercial real estate market is showing its strongest momentum in years. According to a new report from Colliers, office leasing in Manhattan jumped more than 20% in August 2025 compared to July, totaling 3.7 million square feet.
If this pace continues, leasing activity is expected to surpass 40 million square feet for the year — a milestone not reached since 2019, signaling a major comeback for New York City’s office sector.
Leasing Momentum Outpaces 10-Year Average
The August leasing surge was well above Manhattan’s 10-year monthly average of 2.72 million square feet. Historically, annual leasing hovered around 32 to 33 million square feet over the past 25 years. In 2024, Manhattan hit that average again for the first time since the pandemic disrupted the market in 2020.
“This is a very strong market in terms of demand,” said Franklin Wallach, executive managing director for research and business development at Colliers.
Return-to-Office & Industry Growth Drive Demand
Several factors are fueling Manhattan’s leasing boom:
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Return-to-office momentum and low unemployment
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Growth in tech, led by Amazon leasing more than 1 million square feet since November 2024
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Strong leasing from law firms, which hit a record 4 million square feet in 2023
Newer Class A buildings like One Vanderbilt, Hudson Yards, and Manhattan West are seeing especially tight availability, reflecting a “flight to quality” trend.
Availability Tightens, Rents Edge Higher
Manhattan’s availability rate fell to 15% in August, its lowest since January 2021 and the 18th consecutive month of stability or tightening. Newer buildings saw availability drop to just 6.7%, compared to 17% for older, prewar buildings.
The average asking rent rose to $74.73 per square foot, up 1% from July. While rents remain 6% lower than pre-pandemic (March 2020), analysts note that more landlords are starting to reprice upward.
Office Conversions Impacting Supply
Conversions of office buildings into residential and other uses are also shaping the market. Nearly 9 million square feet have been removed from Manhattan’s office inventory over the past four years. For every 1 million square feet converted, about 270,000 square feet of new leasing demand is created as displaced tenants relocate.
Outlook: Strongest Market Since Pre-Pandemic Era
With demand outpacing historical averages, office availability tightening, and new leases led by major industries, Manhattan is positioned to finish 2025 with its highest leasing volume in six years.
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