Prepared by Richard Plehn, and Vanessa Ollarves.
Please click on the slideshow below for the full report. Alternatively, you can also follow the link on the button to read it on PDF.
SUMMARY OF THE COMMERCIAL OFFICE MIDTOWN MARKET- Q3 2025
RENTS EASE AS AVAILABILITY TIGHTENS
In Q3 2025, base rent declined to $50.52 from $51.96 in Q2 2025. This can be attributed to Class A space
being leased in Midtown. This decline may be attributed to leasing space in Class A buildings, where the
rent is higher than average. As a result, when the space is leased, the average rents decrease. The availability
rate continues to decrease each quarter, falling to 13.9% from 14.5% in Q2 2025. Although this downward
trend continues, they are still significantly higher than the 5-year average Pre-COVID low of 8.1%. It’s
important to note that, as shown in previous quarters, the availability rate could be lower due to office
buildings being converted into residential units and office buildings under financial stress.
SUBLET MARKET CONTINUALLY DROPS
The sublet market in Midtown has continued to decline from 18.8% in Q3 2024 to 17.3% in Q3 2025.
ONLY THREE BUILDINGS HAVE OVER 500,000 SF AVAILABLE
Notably, there are only three buildings in the Midtown market offering large blocks of space exceeding
500,000 square feet: 330 W 42nd St, 535 W 46th St, and 343 Madison Avenue.
LEASING ACTIVITY IS BELOW THE PRE-COVID 5-YEAR AVERAGE
This quarter, leasing activity increased to 5,962,812 square feet from 5,943,301 in Q2 2025. Although this
represents an increase compared to the previous quarter, it remains below pre-COVID levels of 6,399,825
square feet. Leasing activity will be stronger than 2023 but not as strong as 2024. It will be the 2nd highest
amount of leasing since COVID. This can be attributed to tenants relocating to Midtown South and
Downtown due to limited availability of high-quality space in Midtown.
CLASS A BUILDINGS CONTINUE TO LEAD LEASING
Historically, class A buildings dominate leasing activity in midtown. This quarter was no exception with
class A buildings accounting for 78.1% (4,659,798 square feet) of leasing activity. Even though Class A
buildings continue to have the highest leasing activity, it represented a decrease from last quarter’s 80.3%
(4,772,470 square feet).
AS EXPECTED, PENN PLAZA/GARMENT, PLAZA DISTRICT AND GRAND CENTRAL DOMINATED LEASING ACTIVITY
Penn Plaza/garment continues to dominate leasing activity in Midtown with 37.9% (2,260,937 square feet),
followed by Plaza District with 28.4% (1,698,520 square feet) and in third place we have Grand Central with
16.4% (978,846 square feet).
AVERAGE LEASE SIZE GROWS, MIDTOWN LEADS MARKETS
This quarter, the average lease size increased to 10,072 square feet from 9,555 square feet in Q2 2025 just above pre-Covid levels 9,635 square feet. The Midtown average lease size is the highest out of all three markets.
FIVE LARGEST DEALS COMPLETED
Five out of five deals were direct, expansions, and in class A building. Deloitte signed a relocation and expansion lease for 807,000 square feet at 70 Hudson Yards, representing nearly three-quarters of the building.
WeWork/Amazon renewed and expanded for 58,103 square feet at 1440 Broadway, this is part of Amazon’s
strategy to consolidate office space in Manhattan and support its return-to-office goals, the company has
partnered with WeWork, which is acting as the lessor in this arrangement. Guggenheim Partners signed a 17-year renewal and expansion at 330 Madison Avenue, increasing its footprint from approximately 240,000 to 360,000 square feet. With this deal, the building is now reported at 100% leased.
STARTING RENTS AND NET EFFECTIVE RENT CONTINUES TO INCREASE
The Landlord Net Effective increased from $71.83 per square foot in Q3 2024 to $74.83 per square foot in Q3. This rise is due to increasing starting rents. The average lease term is seven years and three months, with
tenant improvements averaging $112.07 and 6.9 months of free rent.
SUMMARY
The market in Midtown has recovered. Tenants unable to find suitable space must look in Midtown South or
Downtown. As a result, concession packages will start to decrease in the midtown Class A market. Also,
developers will start announcing new office buildings under construction or retrofitting Class B office buildings.
