New York City office vacancies hit 5-year low amid leasing frenzy

New York City’s office market is thriving, with leasing volume reaching levels not seen in years.

Vacancy rates have dropped to 14.8%, the lowest in five years, with trophy buildings at just 7.6%, close to an all-time low, according to JLL’s latest report.

In the third quarter, leasing activity hit 6 million square feet, bringing the total year-to-year leasing to 21.7 million square feet, a 7% increase compared to the previous year.

Meanwhile, average direct-lease rents in Midtown rose by 2% in the third quarter, reaching $85.44 per square foot. Trophy locations saw an even greater increase of 3.1%, reaching $132.24 per square foot.

CBRE also reported low availability and vacancy rates, with sublease availability decreasing significantly since 2023.

Industry analysts who claim that Manhattan offices remain half empty due to work-from-home policies are being proven wrong by recent large leases from companies like Deloitte, NYU, Amazon, and Guggenheim.

“These are not short bets, but long-term commitments that underscore confidence in Manhattan’s role as a global business center,” said JLL Vice Chairman Joe Messina.

The investment-sale market has also seen a resurgence, with notable sales and new development projects underway, further showcasing confidence in the market.

Research has shown that more employees were present in Manhattan offices in July of this year compared to the same month in 2019, contradicting the notion of a work-from-home trend.