Midtown Office Market On Pace for Strongest Leasing Activity Since 2018

It’s been a good autumn for Manhattan’s office market, but it seems like Midtown is vastly outperforming any other neighborhood in terms of leasing activity.

In October alone, 3.9 million total square feet of office space was leased in Manhattan — 2.3 million square feet of which was leased in Midtown, according to a report from Colliers. That’s compared to Midtown South’s 1.3 million square feet and Downtown’s 275,213 square feet leased last month.

That means Midtown’s office demand more than tripled since September — when only 610,835 square feet were leased — and more than doubled year-over-year, the report found.

Midtown’s success was largely thanks to major leases during October such as Bloomberg’s 924,876-square-foot lease at 919 Third Avenue and investment firm Blue Owl Capital’s 238,673-square-foot deal at the Seagram Building at 375 Park Avenue.

Midtown’s availability rate — the measure of space that is vacant or soon will be vacant — remained stable at 15.5 percent in October, while the average asking rent in the neighborhood declined slightly to $78.39 per square foot from $78.56 per square foot in September, Colliers (CIGI)’ report found.

And, if the neighborhood’s demand continues at the rate it’s going, Midtown is on track to have the “strongest full year of activity since 2018,” according to Colliers.

“The Midtown market has gone through a very interesting evolution over the last couple of years because, pre-pandemic, there was a big question mark over Midtown,” Frank Wallach, Colliers’ head of research, told Commercial Observer. “Millions of square feet of tenants had migrated out of Midtown proper into Hudson Yards, Manhattan West or Lower Manhattan.”

But after the pandemic, workers started moving back to the Midtown area and the neighborhood was able to recover, Wallach said.

“Now, Midtown has caught up, not just with new construction, but with renovations that have really competed with new construction and helped keep Midtown tenants in Midtown,” Wallach added.

The area has also emerged as an attractive destination for health care and tech tenants — especially around Bryant Park, an area where tech companies like Indeed, Salesforce and Microsoft have offices.

This comes as Manhattan was deemed one of the top office markets in the country during the third quarter of 2024, with 8.6 million square feet leased during the period, according to Colliers’ national office market report.

Wallach predicted leasing activity in both Midtown and Manhattan as a whole will likely continue to climb through the rest of the year as landlords and tenants push to close deals before the holidays.

Isabelle Durso can be reached at idurso@commercialobserver.com.