New York City Office Market Report

Manhattan leads recovery amid broader tenant mix. New York City posted one of the sharpest office vacancy declines in the nation for the second straight year in 2025, led by Manhattan’s rate dropping over 200 basis points to under 15 percent. Midtown sustained record net absorption as financial services firms sought premium space, pushing Class A vacancy below the Class B/C rate. A growing technology presence also supported tightening in downtown and Midtown South, where New York University signed a 1 million-square-foot lease to expand its STEM programs and strengthen the talent pipeline. Some outer-borough submarkets have lagged as firms trade out of older, oversized spaces and move into smaller Manhattan offices at historically attractive rents. Yet, as vacancy tightens in the core and firms gain clarity on needs, move-outs should slow. Overall leasing may ease in 2026 amid softer hiring, while proposed corporate tax hikes could deter relocations, but decade-low construction should help sustain firming conditions.