For Manhattan Class B Office, the Days of Optional Amenities Are Past

After several years of Class A Manhattan office product benefiting from ever-increasing levels of demand, the heat in the sector is beginning to shift downward.

Companies in search of well-kept space at less-than-trophy rents are seeking more Class B office space than before while Class A is experiencing a slight downshift in desirability — and a new class of amenities might be making the difference. 

SEE ALSO: A Wave of New York Office Tower Listings Tests the Market’s Recovery

According to CoStar, while office demand in New York is “white hot” overall, Class A demand, in the form of new leasing, was lower in the first half of 2026 than it had been during the same time last year — from 11.6 million in the first half of 2025 to 10.3 million square feet in 2026.

Class B and C demand, on the other hand, is rising due to factors that include less Class A availability, rising Class A rents, and a competitive environment within Class B that has made amenities an increasingly common addition to previously unadorned spaces.

New leasing for Class B and C office in the first half of this year reached around 7 million square feet. This not only eclipses activity in the B and C classes over the same period in each of the past three years, which ranged from 4.2 million to 5.2 million square feet, but has surpassed the pre-pandemic average from 2015 to 2019 of around 6.4 million.

CoStar also noted that Class B and C product — classified as office buildings that merit one, two or three stars on a five-star scale — averaged around 39 percent of new leasing activity pre-pandemic, a number that dropped to just 31 percent by last year. For the first half of this year, that percentage had risen back up to roughly 40 percent.

All of this leads the data company to conclude that “the city’s office recovery is no longer limited to trophy or top-tier buildings, with more price-sensitive and mid-market demand returning.” 

But that rising demand comes with a caveat beyond the numbers: that Class B offices provide at least some of the types of amenities previously found mostly in Class A spaces.

The current competitive environment, therefore, requires Class B office owners to think like Class A owners, albeit with less space and smaller budgets.  

When discussing the efforts of Class B owners to upgrade their buildings, it’s worth reinforcing that the terms Class A and Class B (and Class C, for that matter) are sometimes loosely defined and always driven by marketing, and their definitions have shifted in recent years. Plus, owners and brokers refer to some buildings as B-plus or A-minus, and one company’s Class A can be regarded elsewhere as A-minus.  

Given the rise of trophy properties, with amenities that could include top chef-branded eateries, high-end spas, concierge services and the equivalent of private clubs, it’s fair to say that standards at the very top have risen substantially since the pandemic, pulling the definitions of other classes of buildings upward with them. 

Today’s Class B office space, then, might resemble what the lower end of Class A might have been just a decade ago. 

Empire State Realty Trust (ESRT) rejects the class designations, referring to some of its older but well-amenitized buildings as “prewar trophies.”

Ryan Kass, executive vice president, co-head of real estate and chief revenue office at ESRT, noted that the change in approach to amenities accompanies a recent shift in the very significance of the office itself.

“What’s changed in real estate is that office space is no longer just an expense on the balance sheet. Your office space, the location and the amenities you provide are all about employee recruitment and retention, and ultimately employee productivity,” said Kass. “So our job is to partner with our tenants and help them get and retain top talent. That drives everything we do.”

With this in mind, Kass said that, since COVID, the Manhattan office market has evolved from being separated by basic class distinctions into a divide between haves and have-nots.

“Tenants want modernized, amenitized, well-located buildings, and they want them with landlords that have the financial wherewithal and stability to deliver on their promises,” said Kass. “We’re able to attract tenants who are looking at steel and glass, but see the value proposition within our product. We’ve done all the modernization. We have the infrastructure of new steel and glass — the indoor environmental air quality, the sustainability. We check all the boxes that brand-new construction checks.”

A second-quarter 2026 Manhattan report by Cushman & Wakefield placed Class A asking rents in Midtown at $88.50 per square foot, while Midtown South asking rents for Class A office sat around $104.50.    

By comparison, several recent leases at ESRT buildings signed for asking rents in the low $60s per square foot. These include Jencap Group paying $61 per square foot for 19,883 square feet at 1350 Broadway in October 2025, and Steve Madden signing for 60,000 square feet at 501 Seventh Avenue in April 2026, also for an asking rent in the low $60s.

But, if the rents place these buildings firmly in the Class B category, tenants are getting more for their money than the classification might have suggested not that long ago.

That’s because ESRT owns seven buildings within a narrow Midtown footprint, allowing them to host significant amenities in one that can be utilized by tenants in all.

“We have 6 million square feet within a small radius,” said Kass. “The owner of a 300,000-square-foot building probably can’t make the economic case to put a 130-person
all-hands conference center in a building like we have at 1400 Broadway, or a 250-person rooftop at the top of 1333 Broadway like we did.”

Terraces in, gyms out

Conversations with Class B office owners and brokers indicate that outdoor space and “town hall”-style meeting space are the amenities most in demand. Office fitness centers, while not being completely abandoned, seem to be less desired.

Michael T. Cohen is a principal at Williams Equities, which owns Class B office buildings mostly in Midtown South, Manhattan’s traditional hub for Class B office properties. 

Cohen said there has been a “sea change” in the approach toward amenities in Class B office space over the past decade, driven at least in part by the question of how to help companies get employees back to the office after the work-from-home COVID years. 

“I sometimes laugh when I look at what was once considered a setback and a good place to put air-conditioning equipment. Today, that’s a terrace,” said Cohen, who also serves as New York tri-state president for Colliers and as chairman of the Flatiron NoMad Partnership.

“Everybody’s been asking themselves which amenities are going to help bring people back into the office, and which amenities are going to help our occupants achieve greater efficiency and entice them into our buildings versus somebody else’s,” said Cohen.

“We ask ourselves: Who is our target tenant and what amenities will matter most to them?” said Cohen. “So for example, about fitness, our tenant is able to join any number of health clubs in the immediate area that will have better facilities than we could ever offer. So, is that amenity appealing to our target tenancy? The answer is no. But you can’t outsource a bike room to the neighborhood Crunch. People want to be able to bike to work, particularly our target clientele. That matters.”

Andrew Wiener is head of commercial office leasing for the Feil Organization, which owns and operates roughly 15 Class B office buildings in Midtown and Midtown South. 

Feil is currently developing what Wiener refers to as the company’s “first large-scale amenity,” a 14,000-square-foot roof deck that will be accessible to all tenants at the 357,000-square-foot, 18-story 7 Penn Plaza (aka 370 Seventh Avenue), which was built in 1921.

Wiener noted that when considering which amenities to add, owners of Class B buildings have a very different calculus than the often-institutional owners of trophy office product.   

“For institutional capital, [that cost is] on your balance sheet — spend the money, increase the building’s value, and you’ll deal with it later because it’s within a consortium of buildings,” said Wiener. “With individual owners, which you’re getting with Class B buildings, you’re hard pressed to spend a ton of capital if you’re not able to vastly increase the rent.”

Wiener also noted that a building’s size is another factor in determining which amenities can be developed.

“In buildings that are 500,000 to a million square feet or greater, it’s a lot easier to carve out 10,000 to 15,000 feet for an amenity space, take it out of the rent roll and spread [the cost] around,” said Wiener.

The hub-and-spoke approach 

Some Class B owners add amenities in less-marketable spaces, or create building-wide amenities out of single-tenant amenities after regaining control of that space.  

At Feil’s 841-853 Broadway, two technically separate but connected buildings, the company will be able to reclaim an outdoor terrace at 853 Broadway from an outgoing 10-year tenant 18 months from now. Feil plans to convert the terrace into a building-wide amenity.

At the company’s 261 Fifth Avenue, a tenant with exclusive rights to a roof deck in the building recently relocated to a larger space elsewhere in the company’s portfolio. That roof deck will be available to all tenants moving forward.

Wiener also said that Feil plans to install a conference center at its 488 Madison Avenue when it regains control of space on the second floor that is “not desirable space.”

“When you talk to architects, tenants and their project managers, the location of the amenity really matters,” said Wiener. “So we’re going to take a space that’s undervalued, underutilized and would otherwise get a low rent, and we’re going to amenitize that with a great conference center which is connected to the lobby.”

Brian Soto, director of acquisitions and asset management at Time Equities, said that the emergence of the luxury approach within the Class A and trophy office space has pressed Class B office owners in new ways.

“The flight to quality has really squeezed the Class B market, and we don’t only see that in New York City. We see that throughout our portfolio and throughout the country,” said Soto, who mentioned that the addition of new amenities is sometimes based less on immediate tenant demand than simply the need for Class B owners to remain competitive.

“Amenities are a benefit, but I would not say they are the deciding factor for most companies,” said Soto. “When one building has amenities and another doesn’t, that’s going to bring [prospective tenants] to the first one even if there’s a price differentiation. At our 55 Fifth Avenue, where we created a fitness center, a wellness room and a new rooftop deck, it helps, but I don’t think it’s the defining factor.”

The Kaufman Organization owns and operates around 12 Class B office buildings in Midtown South ranging from about 60,000 to 250,000 square feet, said Grant Greenspan, a principal at the Kaufman Leasing Company.

Greenspan, who refers to Midtown South as the central hub for “both the Class B building and the AI tenant” and “the most robust market in the city right now,” said Kaufman put one amenity center in the basement of its 875 Sixth Avenue, also known as One NoMad, at a cost of around $300 per square foot, and another on the 30th floor at 450 Seventh Avenue, where it also has a roof deck and a conference facility.

“We don’t call them ‘basements’ anymore. They’re ‘lower levels,’ ” said Greenspan. “These amenity centers essentially consist of 5,000- to 10,000-square-foot spaces where a tenant can hold an event. They’ll have things like a bar, a catering facility, a warming kitchen and TV sets, and we also have conference rooms that can be rented out with full audio and video capabilities as well as a screening room. It’s all very conducive to on-site corporate events.”

With 450 Seventh Avenue on the corner of West 34th Street, the building’s amenities provide an advantage in a competitive area. 

“450 Seventh Avenue competes with Penn buildings, which obviously have significantly larger amenity centers,” Greenspan said, referring to Vornado Realty Trust’s mixed-use towers. “But the idea is, if they’re at $130 or $150 a square foot, we’re $60 to $70 a square foot here. It makes sense for tenants that want that amenity but don’t want to pay double-digit rents.”

Pariveda Solutions, a Dallas-based consulting company, moved its 27-person New York office to One NoMad from a smaller, amenity-free Midtown office in July after the expiration of a 10-year lease.

Liv Steinfeld, employee experience specialist at Pariveda, made it clear that the company expected, and has received, a much-upgraded office experience in its new surroundings, clearly beyond what a Class B office would have offered in the past.

“We really appreciated not only the amenity spaces, but the facilities provided in the building,” said Steinfeld. “We were going from an experience where we had to provide all of our vendors for all of our needs, versus coming into this space where pretty much everything is taken care of for us.”

The amenities Greenspan spoke of, Steinfeld said, were a significant part of that.

“The amenity spaces have been super helpful, and were a big attraction for us,” said Steinfeld. “We hosted a big grand opening for our new space a couple of weeks ago, and we got to host it there. We had about 45 people attend. We were able to utilize this great speakeasy lounge area they have, and they also have a screening room where we were able to display demo content for our clients. We were not in a place to be able to do that in our old space.”

In addition to proving to be useful, Steinfeld said the amenity space has led to cost savings.

“Hosting and doing events outside the space is costly. Having a new office space that allows us to host internally lets us save costs, creating a better ROI,” said Steinfeld. The company’s employees have reacted very positively to the space, she said.

“Our New York employees really value the time they can be in person together,” said Steinfeld. “They operate best when they’re able to have that sense of community. So they’ve been ecstatic. Creating different areas where they can spend time together and connect makes them that much more excited to be there.”

David Falk, president of the New York tri-state region at Newmark, believes new amenities can be essential when it comes to leasing space at older buildings. 

“We have found outdoor space and roof decks to be game-changers, [particularly] communal roof decks where people could host a cocktail party, go for lunch, or do their work with a laptop,” said Falk. “437 Madison, which is probably an A-minus, built an amazing amenity space that’s professionally run, and they run events and have outdoor space. We represented a company that moved there from a building that didn’t have that experience. They leased three floors in the building, and they went there because the whole experience was very inviting.”

Amenities without the space 

Given the space restrictions at many Class B buildings, some owners of smaller buildings find the need to take more creative approaches.

Jeff Gural, chairman and principal of GFP Real Estate, noted that many of his Manhattan office buildings are under 200,000 square feet, leaving the company with limited options to add amenities.

“It’s hard to dedicate 10,000 or 15,000 feet of a 150,000-foot building to amenities,” said Gural. “So we do something a little different.”

At 520 Eighth Avenue, which was built in 1926 and is one of GFP’s larger properties at 860,000 square feet, the company is creating an amenity space that will include several conference rooms, a golf simulator and a gym with locker facilities.

Beyond that, GFP enhances the tenant experience with some unconventional extras.

The company made a deal with a GFP tenant called Buckle My Shoe Preschool. Any GFP tenant can enroll a child in the school at half the price of its normal tuition, a valuable commodity in New York City.  

The company also offers some unusual potential perks for tenants willing to try their luck.

“We bought a suite in MetLife Stadium that holds 24 people, and we run a contest during football season,” said Gural. “[Any GFP tenant] can enter a contest to win two tickets to a Jets or Giants game in the luxury suite, with food and all the amenities.” 

This amenity became even more valuable in 2023, when pop superstar Taylor Swift played three nights at the stadium during her Eras Tour.

“We had 120 tickets that we gave away to tenants in our buildings,” said Gural, who noted that the company also gives away tickets to Broadway shows and other events.

This all said, some Class B buildings have seen less of a difference between operations pre- and post-COVID.

Jeff Buslik is executive managing director at Adams & Company, which owns 21 properties in Manhattan and handles leasing and property management for 18 others. Buslik said little has changed in how Adams & Company manages its New York office buildings over the past decade.

“We’ve had a conference center available for our tenants since pre-COVID. We’ve expanded those offerings, but it’s not new for us,” said Buslik. “We have found that our tenants aren’t renting because of the amenities. They’re renting because of the buildings themselves, which are almost like amenities because they’re so well cared for.”

Buslik, who said that Adams & Company has around a 2 percent vacancy rate across its approximately 7.5 million square feet of Manhattan office space, said he believes that while owners struggling to rent space will be incentivized to add extras, most tenants of Class B space seek well-functioning buildings before caring about the bells-and-whistles extras.

“The differentiator is not the amenity. It’s the service and value they’re getting out of that property,” said Buslik. “The companies installing amenities you would typically see in a Class A building are the ones that have no choice. They’re trying to make their building better because they’re lacking in those other departments, and this is what they think will get them over the hump.”

And Time Equities’ Soto believes that, for tenants prioritizing amenities, Class B additions simply can’t compete with Class A buildings if the tenant is willing to pay for extravagance.

“We have seen people look at one of our Class B properties and compare it with newer and highly amenitized Class A product,” said Soto, “and make the decision that they would rather pay a little more and give their staff more options than save a few bucks a year.”

Larry Getlen can be reached at lgetlen@commercialobserver.com.