Midtown South Led Manhattan Office Leasing’s Stellar July Performance

So you think Manhattan office leasing has a summer slump? Fuhgeddaboudit! 

Manhattan office leasing velocity in July increased by 22 percent over June’s volume, helped along by healthy square-footage appetites and ample activity in Midtown South. 

Tenants acquired, renewed, expanded or extended 3.87 million square feet of Manhattan office space last month, according to Colliers’ latest market report, in a year-over-year increase of 28.4 percent from July 2025. Strong demand was led by lease commitments from NBCUniversal Media, AON and Anthropic.

Year-to-date, office demand has increased annually by 12.8 percent to 26.66 million square feet, and remains on track for its strongest year since 2000.

July brought the heat to Midtown South’s office market, in particular. The submarket made up nearly half of all leasing demand last month, despite making up 36.3 percent of Manhattan’s office inventory. The 1.9 million square feet of demand in Midtown South was boosted significantly by its largest deal at 330 Hudson. The ink dried in July on Anthropic’s 465,630-square-foot play for the entirety of the AEW Capital Management-owned building, first reported by Commercial Observer in April. 

Midtown South’s current office supply still towers above that of March 2020 –– a key point of comparison for post-pandemic office recovery. However, there’s plenty of reason for optimism in Midtown South, as well as Manhattan at large. 

Since the submarket’s post-pandemic supply peak in November 2023, Midtown South’s available office inventory has been cut by 36.2 percent, according to Frank Wallach, executive managing director for research and business at Colliers. Between June and July, availability there decreased by about half a percentage point down to 12.2 percent.

“You don’t just see in any given month availability dropping by half a percentage point,” Wallach told Commercial Observer. “That’s a significant movement of the needle.”

Similarly fast-paced declines have been tracked across Midtown and Lower Manhattan, as well. The downward trajectory is driven across submarkets by varying combinations of healthy demand, office-to-residential conversions and declining sublease supplies (though conversions have seen somewhat of a halt lately amid an uptick in city scrutiny).

In July, the collective office market’s availability reached its lowest point since September 2020, with 66.24 million square feet of office space up for grabs. The submarkets Colliers tracks –– Midtown, Midtown South and Lower Manhattan –– have all seen marked declines since their post-2020 gluts. 

“The three markets are so unique, but I found it remarkable that, give or take a few percentage points, they’re all down by about a third since their post-pandemic peaks,” Wallach said.

While Midtown South and Lower Manhattan still have some catching up to do, Midtown’s overall availability today is only 1.6 percent above its March 2020 level, Wallach said. 

Manhattan’s overall pace of office absorption, which factors in both demand and space removed from the market, has declined from its rapid 2025 clip. That doesn’t mean that recovery is further out of reach, however. Approximately 5.5 million square feet of Manhattan office was absorbed during the first six months of 2026, according to Colliers. If demand continues at this pace, then March 2020 levels could be in sight within the next two years.

But that’s a very big “if.”  

“To continue at this pace is a challenge,” Wallach said.

Demand aside, welcome signs of recovery can also be found in rents. At $78.03 per square foot in July, average office asking rents in Manhattan are just 1.8 percent off of the $79.47 notched in March 2020. Midtown South, however, is already well beyond its pre-pandemic rent prices. 

Manhattan’s overall office market may not have the “all clear” just yet, but it’s “very much on solid footing, and very much moving in that direction,” Wallach said.

Emily Davis can be reached at edavis@commercialobserver.com.