Midtown’s Office Tenant Mix Post-COVID Leans Into Financial Services

Anchored by the enduring likes of the Empire State Building, Rockefeller Center and 601 Lexington Avenue, Midtown Manhattan tells a consistent story in its trademark buildings — but a more fluid one when it comes to commercial tenants. The neighborhood’s industries tend to fluctuate by the decade, with different office tenants leasing at different times. 

In the 1980s and 1990s, law firms, financial services firms and stock brokerages dominated Midtown’s commercial landscape, while before the pandemic technology, advertising, media and information services (TAMI) joined in with ramped-up lease activity. Since the pandemic, however, TAMI has tapered down, while one particular industry has solidified its position as the neighborhood’s most commanding tenant base. 

“Post-pandemic, financial services has been a leading driver of demand in Midtown,” said Reed Hatcher, senior research manager at Cushman & Wakefield (CWK). “That’s come as TAMI has fallen off somewhat in recent years.”

As Midtown’s most dominant tenant base, financial services has starkly led the leasing charge in the years since 2020. The industry’s dominance correlates, in part, with many financial firms’ stringent return-to-office policies and desire for higher-quality spaces. Yet, as leasing activity continues, Midtown’s Class A options are dwindling and may inform the future of all industries in the neighborhood. 

Right now, leasing in Midtown as a whole has reached its highest point since the pandemic’s onset. Roughly 77 percent of Manhattan office leases across industries were concentrated in Midtown in the last quarter of 2024, according to a Savills report. Meanwhile, Midtown office visitation rates have returned to about 76 percent of their pre-pandemic levels, said Hatcher, citing Cushman & Wakefield data. 

Under the umbrella of Midtown’s leasing successes, financial services firms have recently demonstrated a significant uptick in activity in leasing velocity and transaction volume, said David Goldstein, president of the New York tri-state region at Savills. 

Midtown’s newly vigorous financial tenants include Citadel, which recently inked half a million square feet at 660 Fifth Avenue; Blackstone, which expanded its 345 Park Avenue footprint by 250,644 square feet; and Blue Owl Capital, which expanded by more than 70,000 square feet at 375 Park.

Yet, the successes of financial services firms are more than just anecdotal. In the last quarter of 2024, the industry drove 30.9 percent of leases across Manhattan, as outlined by the Savills report. In keeping with Savills’ findings, Cushman & Wakefield found that roughly 36 percent of Midtown’s new leases across 2024 correlated with financial services firms.

The prevalence of financial services in Midtown has held up both pre- and post-pandemic, but with a more palpable rise in recent years. According to Cushman & Wakefield data, the sector was responsible for 31.1 percent of Midtown leases in 2005 and 31.74 percent in 2010. Between 2018 and the first quarter of 2020, financial services companies signed 25.9 percent of Midtown’s new leases exceeding 10,000 square feet, with TAMI companies closely behind at 22.1 percent, according to another Cushman & Wakefield report. The real estate industry itself followed at 13.6 percent. 

Between the second quarter of 2020 — just as the pandemic lockdowns started — and January 2025, however, financial services firms accounted for 43.7 percent of new leases. By comparison, TAMI’s share declined to 14.8 percent, while legal firms exhibited the third-highest leasing activity at 13 percent, followed by professional services, then real estate. 

“It’s not surprising that finance and real estate, insurance and banking, and law firms constitute the bulk of the activity,” said Michael Gottlieb, a principal of office leasing at Avison Young, “because they are the bulk of the tenants, not only in Midtown but really in the city.” 

In Midtown specifically, the nature of post-pandemic work helps explain why leasing activity from financial services firms has strengthened. As a sector, the industry has spearheaded stricter return-to-office policies. Many financial companies, such as J.P. Morgan and HSBC, have led the charge toward a more normalized work schedule by requiring office employees to work in-person five days a week.

“Midtown has certainly received a strong boost by those factors that have come to play in terms of companies wanting to take a flight to quality, if you will, looking to attract staff back to the office,” said Hatcher.

Many companies have exhibited a preference for the neighborhood, given the nature of its office buildings and its many options for commuters, said Hatcher. Midtown offers easy access to transportation hubs such as Grand Central Terminal and Penn Station.

Beyond location, however, Midtown also houses the highest concentration in the city, and maybe in the nation, of high-
quality Class A and trophy office space, both new and converted. 

“The reality is, as organizations have shaped their return-to-office policies, many have led through the lens of offense in creating the workplaces of choice,” said Goldstein, “and a lot of those workplaces will be found in buildings that were either recently built or recently recapitalized and amenitized.”

These in-demand spaces include both adaptive reuse projects and newer buildings, such as Tishman Speyer’s The Spiral and Related’s Hudson Yards development. Within Midtown, however, Park Avenue in particular has materialized as a preferred location for many financial firms, with roughly 33 percent of the avenue’s post-pandemic leasing stemming from the financial services sector, said Hatcher. Specific tenants include Blackstone, as well as Elliott Management, which leased roughly 149,000 square feet at 280 Park, and Ares Management with a 131,749-square-foot expansion at 245 Park.

Still, while Park Avenue houses various financial services firms, it also helps explain the challenges of Midtown leasing across industries, indicating further fluidity in the neighborhood’s tenants. Following the pandemic, Class A office space has become a major draw with major limitations.

“Park Avenue already has the lowest vacancy rate in all of Manhattan,” said Hatcher. “As of January, it was 10.9 percent, so it’s a fairly tight, tight submarket.”

The majority of Class A space is in Midtown, said Gottlieb, who foresees a moment of scarcity for potential tenants. As outlined in the Savills report, Midtown’s trophy market availability rate dropped by 350 basis points, to 11.1 percent, in the last quarter of 2024.

“The trend over the past number of years has really not been driven so much by geography, but by finding the right space, and a lot of that is due to tenants that want to improve their quality of life,” said Gottlieb.

Goldstein also noted the lack of vacancy in Midtown, declaring a “triple witching hour” given the post-pandemic drop-off in sublease availability. Then again, Midtown has — and will likely always be — something of a citadel for global finance, law and corporate companies, said Goldstein.

Regarding the neighborhood’s last few leasing cycles, he pinpointed an increase in larger technology companies — Apple, for instance, signed a lease for 61,000 square feet at Penn 11 in November — alongside finance, as well as law. Per Cushman & Wakefield’s data, the legal sector accounted for nearly 19 percent of 2024’s new Midtown leases, thanks in part to Ropes & Gray’s move to a roughly 535,000-square-foot office at 1285 Avenue of the Americas. 

For comparison, leases from legal firms in 2005 and 2011 hovered just under these numbers, responsible for 14.6 and 12.96 percent of Midtown leases, respectively, per Cushman & Wakefield. Between 2018 and 2020, legal services accounted for 12.7 percent of new Midtown leases. 

As for the tenants of Midtown’s future, the neighborhood’s past may therefore be the best crystal ball. “Midtown has in many ways reinvented itself already, right?” said Savills’ Goldstein. “It’s sort of the hub of finance and law, but it has tech, it has creative services, it has nonprofits, hospitals, schools — so it’s really a beautifully diversified sort of marketplace to begin with.”

Anna Staropoli can be reached at astaropoli@commercialobserver.com.