Manhattan Office Leasing in 2024 Heftiest Since 2019

Manhattan’s office market ended 2024 with strong leasing activity and low availability rates, paving the way for a potentially successful 2025.

In Manhattan alone, 2024’s leasing activity hit 33.3 million square feet by the end of the fourth quarter, representing the highest full-year demand since 2019, according to a report from Colliers (CIGI).

In addition, Manhattan’s availability rate of 16.5 percent during the fourth quarter was the lowest in more than two years, while the overall availability rate also dropped in Midtown and Lower Manhattan quarter-over-quarter, Colliers found.

“The Manhattan office market ended 2024 on a fundamentally positive note,” Franklin Wallach, head of research at Colliers, said in a statement to Commercial Observer.

“Pockets of the market returned to pre-pandemic leasing volume while others continued their march towards reaching pre-pandemic availability,” Wallach added. “The momentum seen in 2024 must continue in 2025 to achieve overall recovery in the Manhattan office market.”

And, despite 2024’s office market still at an “oversupply almost equal in size to the entire World Trade Center submarket,” the relation between high office demand and planned office-to-residential conversions was “inarguably felt in 2024,” Wallach said.

Since the beginning of 2021, almost 8 million square feet of Manhattan’s available office space has come off the market due to planned or ongoing conversions of older office buildings, usually to residential uses, according to Colliers.

But now that more and more companies — including Amazon and Starbucks — are instituting strict return-to-office mandates for 2025, such conversions are removing necessary office space from the market. Even Amazon (AMZN) has had to delay its mandate due to a lack of quality space for its staff.

Still, office leasing in neighborhoods such as Midtown went swimmingly in 2024. At 6.3 million square feet leased during the fourth quarter, Midtown ended the year with the strongest yearly leasing volume since 2018, Colliers found.

That was thanks to major deals during the fourth quarter such as Bloomberg’s 924,876-square-foot lease at 919 Third Avenue, law firm Ropes & Gray’s 538,088-square-foot deal at 1285 Avenue of the Americas, and Apple’s expansion to nearly 400,000 square feet at Penn 11.

It remains to be seen how 2025 will play out for Manhattan’s office market, but it seems conversions and maturing office debt will be major factors for landlords and tenants this year.

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