After several years of uncertainty, New York’s office market is showing signs of renewed strength. Leasing activity picked up sharply over the summer, major tenants committed to large blocks of space, and capital has returned to trophy properties across Manhattan. The data suggests a market that is not yet fully recovered, but is clearly regaining traction.
Office Leasing Gains Momentum
Colliers reported that tenants signed 3.7 million square feet of office leases in August alone, representing a more than 20 percent increase from July and surpassing the 10-year monthly average. Year-to-date leasing has already surpassed 15 million square feet, and Manhattan is now on pace to top 40 million square feet for 2025, a milestone not seen since before the pandemic. Availability has tightened for eleven consecutive months, and the sublet supply has returned to its lowest level since early 2021. Midtown South has been particularly active, accounting for more than half of last month’s deals.
Large tenants are helping to drive this resurgence. Deloitte made headlines with its 800,000-square-foot lease at 70 Hudson Yards, the most significant ground-up office commitment in Manhattan since the pandemic. They were joined by Amazon, Verizon, and Piper Sandler, each securing substantial space. These commitments underscore the continued pull of well-located, amenity-rich buildings even as older assets face headwinds.
Investment Activity Picks Up
Investment activity is also showing signs of renewal. RXR’s $1 billion purchase of 590 Madison Avenue marked the first billion-dollar New York office trade since 2022, with financing support from Apollo. Silverstein Properties and CalSTRS sold 1177 Sixth Avenue for $570 million, while Savanna agreed to acquire the leasehold on 444 Madison Avenue for $50 million. Developers are also stepping back in: SL Green is under contract to purchase 346 Madison Avenue for $160 million, with plans for a major tower, and Boston Properties is moving forward with its billion-dollar 343 Madison project.
Not every market is moving at the same pace. South Florida, which surged during the pandemic, is cooling. Los Angeles is grappling with a 30 percent downtown vacancy rate, while San Francisco’s vacancy rate remains the highest in the nation at nearly 35 percent. Chicago and Houston also continue to face structural challenges. Against that backdrop, New York’s rebound is a bright spot, giving landlords, lenders, and investors reasons to be more confident in the office sector’s trajectory.
Financing Implications
For financing, the implications are significant. Rising leasing volumes and renewed investment activity indicate healthier property-level fundamentals, even as elevated interest rates continue to influence the cost of capital. While not every property will benefit equally, top locations and high-quality assets are demonstrating clear demand. For owners and developers navigating capital markets, the ability to point to a tightening leasing environment and fresh billion-dollar transactions is a welcome shift after years of uncertainty.