Manhattan Office Market
Limited large block additions and steady leasing led to a fifth consecutive quarter of declining availability, falling to 16.9%. Second quarter leasing regressed to 8.4 MSF, but year-to-date activity is up 21.4% compared to the first half of 2024. All three Manhattan markets recorded a quarterly increase in rental rates, the first time since 4Q21. Available sublease space decreased to 14.6 MSF, the lowest quarterly total since 2Q20. Midtown trophy assets continued to outperform the overall market as direct availability within the set declined to 5.2%. Demand for office space remains strong with 28.0 MSF of active requirements, the highest level since 4Q18. There has been more than 30.0 MSF of new office construction in the past decade, yet just 349K set to deliver over the next several years. 13.5 MSF has either commenced conversion or is planning to do so, following 3.7 MSF of buildings converted since 2020.