Manhattan Office Leasing Starts 2026 Strongly Amid Shrinking Class A Inventory
By Mark Hallum and Emily Davis April 1, 2026 11:19 am
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It was another strong quarter of office leasing in Manhattan, and the spillover in demand is likely going to hit the market’s Class A-minus and Class B space next as top-tier Class A space fills up.
With more than 10.4 million square feet of leases signed in the first quarter of 2026, Avison Young researchers believe the office market has stabilized in its upward trajectory, with midsize leases between 10,000 and 50,000 square feet keeping the momentum going, according to a new report from the brokerage.
Colliers, which also released a first-quarter Manhattan office report, put office leasing volume for the period a bit higher at 11.78 million square feet, less than 1 percent off the previous quarter and the strongest single first quarter the firm has tracked in six years.
Manhattan’s leasing volume during this year’s first quarter was similar to the first quarter of 2025, but it was 41 percent above the average volume from all quarters spanning 2020 to 2024, according to Avison Young. The steady uptick in leasing is a result of tenants seeking high-quality space — or as high-quality as they can get.
“There’s space at the top of the market that’s been spoken for, so I think there are those who are trying to get ahead of those decisions and lock down the next quality of space before it also gets competitive there,” Vikrant Ghate, Avison Young’s market intelligence manager in New York City, told Commercial Observer. “I would say the next quality of space is [remaining] Class A and select Class B.”
Meanwhile, Manhattan’s availability rate decreased to 14.6 percent in the first quarter of 2026, compared to 17.3 percent in the same period last year, Avison Young’s report found. Colliers identified a Manhattan availability rate of 13.7 percent, a promising figure that remains elevated above the 10 percent rate that Franklin Wallach, executive managing director of research and business development at Colliers, called Manhattan’s market equilibrium.
The slowly declining availability rate comes as the number of renewal leases diminished from representing around 50 percent of all deals in 2023 to only about 20 percent today, according to Avison Young. The other 80 percent of deals, according to the brokerage, have been for new leases and expansions, led mainly by finance, insurance and real estate firms.
Some of the biggest leases of the quarter included Bank of America in March adding 600,000 square feet to its lease at the Durst Organization’s One Bryant Park to occupy almost the entire 2.44 million-square-foot building.
Trailing behind was law firm Gibson, Dunn & Crutcher’s 362,000-square-foot renewal at 200 Park Avenue and financial operations firm Ramp’s 285,303-square-foot lease at Williams Equities’ 28 and 40 West 23rd Street. Those deals were followed by sports platform Fanatics’ 210,000-square-foot takeover at 95 Morton Street and artificial intelligence research firm Clay Labs’ deal for 202,875 square feet at 11 Madison Avenue.
The average asking rent across Manhattan, which ranged between $77.55 and $91.52 per square foot in the first-quarter reports, is also shifting rapidly.
Average asking rents for Class A products reached their highest level since July 2020, and Class B asking rents grew by 1.9 percent to a record high, according to Colliers’ Wallach. The record rents were driven by demand in the technology sector, removal of underperforming space via office conversions, and the shrinking supply of space available for sublease, Wallach told CO.
“We actually have less sublet space today than we did in March 2020, and that was a key metric in determining when we’re arriving at recovery,” Wallach said.
In addition, Avison Young’s Oliver Petrovic said asking prices are often changing before tenants’ very eyes, and often in the middle of a negotiation.
“I think it’s a combination of landlords feeling particularly bullish,” Petrovic said in an interview. “But also, again, [there are] certain inventory challenges within certain sectors where there are fully amenitized buildings, [and] maybe they’ve underwritten their property in a way where they need certain face rents and demand as such that they feel they can raise rents.”
Mark Hallum can be reached at mhallum@commercialobserver.com, and Emily Davis can be reached at edavis@commercialobserver.com.
