Office leasing in Manhattan saw a surge in the fourth quarter of 2025, increasing by more than 25% to 11.87 million square feet. Demand was 16% higher year over year, close to 52% above the five-year average. The island had its strongest leasing quarter since 2019, with rents also on the rise.

The increase in leasing was driven by factors such as tenant flight to quality, return-to-office trends, and expansions by major tenants like Amazon and BlackRock. Demand came from various industries, including finance, tech, legal, education, and government. The oversupply of office space is slowly being absorbed, leading to tighter supply and higher rents.

Manhattan’s average asking rent in Q4 was $76 per square foot, the highest since October 2020. Class A product rents increased to $83 per square foot, while Class B rents hit a record high of $68.61 per square foot. Flight to quality continues, with 69% of leased space in four- or five-star buildings.

Quarterly net absorption in 2025 was positive by close to 4 million square feet, with 15.56 million square feet absorbed for the year. Strong demand was also fueled by building conversions to nonoffice use, prompting a wave of leasing by relocating tenants. Despite market improvements, surplus office supply remains a challenge.

Read more at CNBC: Manhattan Q4 office leasing was strongest in 6 years