Lower Manhattan Office Leasing Doubles in 2025

Lower Manhattan’s office leasing total has already reached 4 million square feet for the year, double its annual total for 2024, according to a December report from JLL.

The report also found that vacancy in Lower Manhattan has decreased year-over-year by 100 basis points. 

John Wheeler, executive managing director at JLL, explains the causation.

“Downtown Manhattan’s office market today is in a far healthier and more balanced position than in recent years, and a major reason for that is the wave of office-to-residential conversions,” Wheeler said in a statement to Commercial Observer. “Lower Manhattan has, by far, the highest concentration of buildings being removed from the office inventory, and that dynamic has fundamentally reshaped supply and demand. As millions of square feet come off the market, tenants displaced by these conversions have created a new and important stream of leasing velocity.”

JLL’s third-quarter Downtown office report indicated that “overall vacancy decreased by 100 basis points year-over-year to 17.8 percent in Q3 2025, down from 18.8 percent in Q3 2024.”  

The December report indicates that while offices throughout Midtown and Midtown South have filled up, “Downtown still offers good quality blocks of space at a relative discount.”

Part of Lower Manhattan’s prosperous year comes on account of financial firm Jane Street’s 980,000-square-foot renewal and expansion in February, as CO reported. But JLL’s third-quarter report indicated that even without the Jane Street lease, leasing activity Downtown was already up 46 percent for the year.

That report also noted that a majority of the activity occurred in the trophy and Class A space, with office leasing Downtown in those categories nearly tripling year-over-year to 2.7 million square feet.

Since 2020, Downtown has lost more than 5.5 million square feet of inventory due to conversions. It’s poised to lose another 5.8 million, displacing “2.2 million square feet of existing tenancy,” according to the report, which also cited asking rents as up 3.1 percent from the third quarter of 2024.

Wheeler noted that part of Downtown’s healthy leasing year, given the decline in vacancy due to conversion, is that many of the office tenants losing their space to residential chose to remain in the area.

“The vast majority of these firms are choosing to stay downtown, which reinforces the district’s long-term appeal and helps stabilize fundamentals,” Wheeler said in the statement. “We’re seeing tenants migrate into high-quality value buildings like 140 Broadway, 28 Liberty, One New York Plaza and the Water Street corridor, which offer strong amenitization at attractive rents. This activity has pushed the market closer to equilibrium after several years of a distinctly tenant-favorable environment post-COVID. These forces position Downtown Manhattan for an exciting 2026, and one of the strongest demand environments the submarket has seen in over a decade.”

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