New York Market Overview

Office:

Manhattan's Q2 office leasing dropped 18.9% to 9.2 million sq ft. However, a strong Q1, with six 250K+ sq ft deals, led to a 20.7 million sq ft first half, the strongest in over a decade.

Demand tightened availability to 15.4%, with supply falling from 98 million to 82 million sq ft. Sublet supply decreased by over 30% YOY. Asking rent dipped 1% to $74/sq ft, as expensive spaces exited the market.

In 2024, deals for 5-15K sq ft spaces hit 954, projected to exceed 1,200 in 2025 based on Q1's 303 deals. While 40% of leasing volume was for 100K+ sq ft spaces (4% of deals), 67% of deals were for 5-15K sq ft spaces, indicating a small-market trend despite a large Class A office focus.

Verizon signed a lease at Penn 2 for 199,000 square feet.

Law firm Latham & Watkins takes 120K sf in Midtown tower at 1285 Sixth Avenue.

Paul Weiss expands by sublease 85,000 sf at 1345 Sixth Avenue and now leases 850,000 sf.

Steptoe signs a 15-year lease for 58,000 square feet at 1133 Sixth Avenue with asking rents from $115 to $120 per square foot.

Elsberg Baker & Maruri leases 39,000 sf at the Empire State Building and one whole floor and one partial floor at 20 West 34th Street.

Mott MacDonald NY leased 25,000 square feet at the Empire State Building.

The NCAA’s Big East Conference is leasing 7,900 square feet at the Empire State Building.

BGO sues Convene at 101 Greenwich for $10 million in back rent after failing to make rent payments since February.

Seven Seven Six leased an entire 10,000 square foot building at 216 Lafayette Street. The recently renovated building was asking $2 million per year in rent.

Sigma Computing signed a lease for 64,000 square feet at One Madison Avenue.

Rialto Capital claims Isaac and Edward Gindi owe $1.5 million after Starbucks closed its 13-25 Astor Pl location, defaulting on a $26.7 million loan personally guaranteed by the Gindis, who bought the 5,800-square-foot commercial condo in 2004 for $13 million.

Raven Capital Management bought the loan secured by 2226 Third Avenue from Related Companies. The original loan amount was $40 million.

Cord Meyer Development and the Variety Boys and Girls Club of Queens applied for a 276-unit project at 69-10 34th Avenue. The applicants are looking to rezone the site and knock down a one-story bowling alley for a 13-story mixed-use project. The proposed development would span 214,000 square feet, including a 25,000-square-foot community facility to be owned and operated by Variety. There would also be an 8,700-square-foot retail space, in addition to the hundreds of apartments proposed. Roughly 25% of the units would be set aside for affordable housing.

Broad Street Development and its partner TPG Angelo Gordon are looking to construct a boutique luxury condo in the Lower Manhattan neighborhood. They acquired a 10-story historic building at 139 Franklin Street for about $44 million. The total capitalization will cost about $100 million, and they will have up to 18 units.

Jonathan Rose raises $660 million for an affordable housing climate fund.

Rose bets on affordable housing, impact fund amid wave of ESG backlash, Green investments.

Maddd Equities proposes a rezoning for 1014 Brook Avenue in Morrisania, South Bronx, to build two towers (26 and 22 stories) with 1,128 affordable housing units, 167,000 sq ft of commercial space (retail and sports complex), and 1,000 sq ft for light manufacturing (e.g., distillery, woodworking). The 1.2 million sq ft project requires rezoning from manufacturing to mixed-use (manufacturing and residential).

Besides needing a rezoning, another challenge Madruga is facing is ownership. The 159,000-square-foot development site encompasses 19 tax lots. Still, Maddd only owns ten of them, meaning it will either have to acquire the others or work collaboratively with the owners of the properties, many of which are low-rise warehouses.

The media conglomerate identified three developers as finalists to lead the project at 524 West 57th Street. The fate of the property has been up in the air as Paramount pursues a merger with Skydance.

The Charter Revision Commission approved four land use-related questions for voters to consider on the November ballot. A fifth question raises the possibility of moving local elections to even years.

The proposals aim to streamline housing development:

Allow housing projects in 12 community districts with low housing approval rates to bypass City Council review. Publicly financed affordable housing can use a separate Board of Standards and Appeals process, avoiding the lengthy land use review. Eliminate mayoral veto for single-borough affordable housing projects; an appeals board (mayor, City Council Speaker, borough president) can reverse City Council decisions. Create a simplified review for "modest" housing and "minor" infrastructure projects. Develop a singular, digital city map.

The Senate Appropriations Committee approved the fiscal year 2026 spending plan for the Department of Housing and Urban Development and other agencies. The bill forgoes the most extreme cuts proposed by President Donald Trump, declining to slash rental assistance funding or to defund the Community Development Block Grant and the HOME Investment Partnerships programs. The bill includes $37.4 billion for tenant-based Section 8 vouchers (up $1.3 billion compared to last year), $1.2 billion for HOME (around the same as fiscal year 2025), and $4.4 billion for CDBG (up from last year’s allocation of $3.3 billion).

Retail:

Manhattan’s prime retail corridors are experiencing a tightening market. Vacancies are at a low of 14% of spaces available in Q2 2025. Asking rents reached a post-COVID record of $608 per square foot, an 11% year-over-year jump.

New York's retail leasing market is tightening. Times Square saw the largest average asking rent jump, up 19.3% year-over-year to $1,555 per square foot, despite a 21% vacancy rate. Madison Avenue (9.6% vacancy) and Soho (10.6% vacancy) had the lowest availability. Madison Avenue's rents decreased 14% to $835, while Soho's increased 19% to $351 with new leases by Los Angeles Apparel and Lightning Society. Herald Square had the highest vacancy at 35%, but Old Navy signed the quarter's largest lease there (15 years, 55,000 sq ft). In Noho and Nolita, 9.2% of 553 properties were vacant (nearly 185,000 sq ft), with 622 Broadway being the largest empty store.

Just 5 percent of retail spaces in the Flatiron District are empty.

Thirty-six of the Flatiron’s 739 retail properties were vacant. Nearly 1 in 10 properties in each of those areas are empty. About 18 percent of the stores in the Meatpacking District were vacant earlier this year.

Little Big Hospitality takes a 45,000-square-foot lease at 50 Columbia Heights to launch The Beginning Clubhouse. Members will receive curated programming and classes for children, childcare, food and beverage options, coworking spaces, and fitness and wellness amenities.

Velto Pickleball Club inks lease for 14,000 SF at 160 Van Brunt.