Manhattan’s office sector remained lively through the summer months, with vacancy rates shrinking sharply and rental prices climbing steeply. By the close of the third quarter, Midtown’s available office space had decreased to 27.7 million square feet, equaling pre-pandemic levels from March 2020, as reported by Colliers in a recent analysis. This marks the first time a New York City submarket has fully rebounded from pandemic-related occupancy losses.
Leasing activity surged across the borough, with over 10 million square feet of new agreements signed—putting Manhattan on track for its busiest year since 2000. The tightening supply has empowered Class-A building owners to set record-high asking rents at $85.45 per square foot, Colliers data shows. “The Manhattan office market’s recovery continued at a rapid pace throughout the summer and into the early days of autumn,” stated Franklin Wallach, Colliers’ Executive Managing Director of Research and Business Development.
Midtown’s vacancy rate dropped to 11.9%, while average asking rents increased to $85.08 per square foot, a 5.4% year-over-year rise, the steepest third-quarter jump since 2014. The quarter’s largest lease was secured by Proskauer Rose, which expanded its 11 Times Square footprint by 478,000 square feet. Meanwhile, Steven Durels, Director of Leasing at SL Green, observed that rising rents are now a citywide trend, not confined to premium properties.
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The tech-driven hub of Midtown South also set a new benchmark, with 4.8 million square feet of leasing activity, the highest ever recorded for a third quarter, according to Colliers. This surge was partly fueled by Anthropic’s 466,000-square-foot full-building commitment at 330 Hudson Street. Additionally, artificial intelligence companies absorbed nearly 1.1 million square feet of Manhattan office space, extending their expansion after securing 800,000 square feet in the second quarter and 790,000 square feet throughout 2025.
In contrast, Downtown experienced a slowdown, with 850,000 square feet of leases signed, 21.7% below its five-year quarterly average. Despite this dip, Manhattan’s overall vacancy rate fell by 2.4% from July to October, closing at 12.4%, per brokerage figures. The heightened competition for space has shifted bargaining power firmly toward landlords, as strong tenant demand and office-to-residential conversions reduce concessions.
