New York Market Overview

Office:

Manhattan Class B Office Market Heats Up Amidst Tightening Supply.

Manhattan's Class B office market is experiencing increased demand and dwindling availability. This surge is driven by a "flight-to-quality" trend, where tenants unable to secure space in premium Class A buildings are turning to high-end Class B options, depleting the supply of well-maintained older buildings.

Overall office demand in Manhattan is strong, with first-quarter leasing volume reaching 12.2 million square feet, the highest since late 2019. This leasing boom is from returning to the office and a significant portion of employers intend to increase in-office attendance.

The Class A market is particularly tight, with trophy towers like One Vanderbilt and 425 Park Avenue fully leased and limited new Class A construction expected before 2030. While 3.5 million square feet of new office space is planned, much of the Class A space, including J.P. Morgan Chase’s future headquarters at 270 Park Avenue, is already committed.

The scarcity of Class A space is fueling demand for top-tier Class B offices in established buildings. Simultaneously, the Class B supply is shrinking due to a rising number of office-to-residential conversions.

As of April 1, Manhattan's overall office availability was at 18%, with a total inventory of 600 million square feet last spring. Notably, Class B leasing activity surpassed 2 million square feet in both the last and third quarters, marking the first time since the pandemic that Class B leasing exceeded this mark in two out of three consecutive quarters.

Meanwhile, the volume of office space available for sublease has declined for eight consecutive quarters, reaching 3.33 million square feet, the lowest level since July 2020.

• Deloitte has committed to rent 800,000 SF at 70 Hudson Yards.
• Amazon signed a lease at 10 Bryant Tower for 330,000 square feet for a 15-year lease for floors 3 through 11. Amazon will pay $29.5 million per year. After five years, the rent will go up to $32.2 million and in ten years, the rent will increase to $34.8 million.
• Arup rented 100,000 RSF at 140 Broadway relocating from 77 Water Street under a 16.5-year agreement.
• Apollo Global Management signed a lease for 100,000 square feet at 590 Madison. The asking rent was $190 per square foot.
• 99 Park Amalgamated Bank leases 94,000 sf at 99 Park Avenue with a 15-year lease.
• Goodwin Procter signed a lease of 250,000-square-foot for 20-year lease at 200 Fifth Avenue.
• Kirkland & Ellis expands its footprint at 900 Third Avenue by 131,000 RSF. 900 Third is close to 601 Lexington Avenue, where Kirkland & Ellis will occupy 520,000 square feet until 2039.
• Empire Education Corp. signed a 40,000 SF renewal for 10 years at 25 Broadway.
• Mudrick Capital signed a 27,000 SF lease at 31 West 52nd Street.
• ElevatedNY expanded by 26,000 SF at Edison Properties' 1120 Sixth Avenue, bringing the coworking space provider's total footprint in the building to 130,000 SF across four floors.
• Hess Corporation signed a 19,500 sf lease at 9 West 57th Street on the 30th floor for its family office.
• Platinum Equity Advisors leased 16,000 square feet on the 46th floor at 9 West 57th Street.
• Red Door Community, which provides social and emotional support for families and individuals affected by cancer, inked a 9,000 SF lease at 114 W. 26th Street.
• Beaconlight Capital leased 5,300 square feet on the newly completed amenity floor at 9 West 57th Street.

Retail:

Estée Lauder Cos. signed four SoHo retail leases totaling roughly 2,000 SF at asking rents of $1,100 per SF. The properties are located at 120 through 126 Prince Street.

Five Iron Golf signed a 12,000 SF lease to open a new NYC flagship location at The Parkland Group’s 611 Sixth Avenue in 2026. Five Iron is relocating from 138 Fifth Avenue