Manhattan Office Leasing in 2024 Reaches Highest Levels Since 2019

Manhattan’s office market concluded 2024 on a high note, with leasing activity reaching its most robust levels in five years. According to a comprehensive report, leasing activity in Manhattan totaled 33.3 million square feet by the end of the fourth quarter, marking the strongest demand since 2019. The city’s office market is showing signs of recovery, but challenges loom for 2025 as landlords and tenants navigate an evolving landscape.

Key Achievements in 2024 Leasing Activity

The end of 2024 brought notable improvements in Manhattan’s office availability rate, which dropped to 16.5 percent in the fourth quarter—the lowest level in over two years. Both Midtown and Lower Manhattan saw quarter-over-quarter reductions in availability, signaling increased interest from tenants.

“Manhattan’s office market ended 2024 on a fundamentally positive trajectory,” industry experts noted. Certain neighborhoods have returned to pre-pandemic leasing volumes, while others are gradually closing the gap. This resurgence is attributed to significant lease deals, increased return-to-office policies, and office-to-residential conversions reshaping the market landscape.

Major Deals Driving Demand

The Midtown office submarket experienced a banner year, with 6.3 million square feet leased in the fourth quarter alone. This marked Midtown’s highest annual leasing volume since 2018. High-profile agreements included:

• Bloomberg’s massive 924,876-square-foot lease at 919 Third Avenue.
• Ropes & Gray securing 538,088 square feet at 1285 Avenue of the Americas.
• Apple expanding its footprint to nearly 400,000 square feet at Penn 11.

These deals reflect the demand for high-quality office spaces, as tenants seek properties that align with modern needs for collaboration, technology, and employee satisfaction.

The Impact of Office-to-Residential Conversions

Since 2021, approximately 8 million square feet of office space in Manhattan has been removed from the market due to conversions into residential uses. While these projects aim to address housing shortages and adapt underperforming office stock, they also tighten the supply of available office space. Companies like Amazon and Starbucks, both implementing return-to-office mandates for 2025, have faced challenges securing sufficient high-quality spaces for their operations.

Outlook for 2025: Opportunities and Challenges

Looking ahead, the momentum built in 2024 must continue to sustain Manhattan’s office market recovery. However, challenges persist, including the balance between office conversions and tenant demand, as well as the management of maturing office debt. Landlords and tenants alike will need to remain adaptable to navigate these shifts effectively.

With return-to-office policies gaining traction and demand for premium office spaces on the rise, 2025 holds promise for Manhattan’s commercial real estate market. The interplay of innovation, adaptability, and strategic investment will shape the future of office leasing in New York City.