Manhattan office market tightens as vacancy hits pre-pandemic lows

Manhattan’s office market is experiencing a significant tightening, with vacancy rates falling to levels not seen since early 2020. Data from various brokerage firms indicate that the borough’s office space is more occupied now than in the immediate pre-pandemic period, defying previous fears of a permanent market decline.

Class A office rents have reached record highs. According to Colliers, average asking rents for Class A space rose to $85.45 per square foot in the third quarter. Savills reported even steeper increases for top-tier buildings, with rents jumping nearly 10% to $94.91 per square foot. This demand is most acute in amenity-rich, premium buildings, where vacancy rates are hovering around 12%.

Leasing activity remains robust, with over 10 million square feet leased in the third quarter, marking the fourth consecutive quarter of such volume—a milestone not reached since 2002. Major transactions include a 478,000-square-foot renewal by law firm Proskauer Rose and a full-building lease by AI firm Anthropic. Demand is being driven largely by technology, advertising, media, and information (TAMI) tenants, as well as financial services and real estate sectors.