Prepared by Richard Plehn, Lisa Ann Pollakowski, Vanessa Ollarves, Steve Gardner
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SUMMARY OF THE COMMERCIAL OFFICE OVERALL MARKET – Q3 2026
OVERALL LEASING DECREASED BUT REMAINED ABOVE PRE-COVID LEVELS
Manhattan leasing activity totalled 10.7 million square feet in Q3 2026, down from approximately 11.2 million
square feet in Q2 and 12.5 million square feet in Q1. However, Q3 leasing was greater than the same period
for both 2025 (10.2 million) and 2024 (also roughly 10.2 million) and represented the second highest Q3 total
since 2014. It also marked the ninth consecutive quarter in which leasing exceeded 10 million square feet.
Activity remained approximately 7.1% above the pre-COVID quarterly benchmark of 9,963,875 square feet.
Through the first three quarters of 2026, leasing totalled 34.3 million square feet, exceeding the full-year totals
for 2022 and 2023, and ahead of the first three quarters of last year, which amounted to 32.9 million square
feet. If the current pace continues, full-year leasing volume would reach approximately 45.8 million square feet, which would be the highest annual total recorded since 2014, when leasing reached 50.6 million square feet.
MIDTOWN ACCOUNTED FOR MOST LEASING ACTIVITY
Midtown recorded 6.8 million square feet of leasing in Q3 2026, representing 64.2% of total Manhattan activity.
Volume increased from approximately 6.6 million square feet in Q2 and remained above its pre-COVID
quarterly benchmark of approximately 6.4 million square feet.
Midtown South totalled 3.0 million square feet, denoting 27.8% of total activity. Leasing declined from
approximately 3.1 million square feet in Q2 but remained substantially above its pre-COVID quarterly level of
approximately 1.9 million square feet.
Downtown recorded 861,900 square feet of activity, accounting for 8.1% of Manhattan leasing. Activity
declined from approximately 1.5 million square feet in Q2 and remained below its pre-COVID quarterly
standard of approximately 1.7 million square feet.
CLASS A CONTINUED TO DOMINATE LEASING ACTIVITY
Class A buildings accounted for 64.4% of Manhattan leasing activity in Q3 2026, representing approximately
6.9 million square feet. However, volume declined from approximately 7.1 million square feet in Q2.
At the same time, Class B buildings accounted for 29.7% of activity, with approximately 3.2 million squarefeet leased. Class C represented the remaining 5.9%, or approximately 630,000 square feet. Class B leasing
activity is gaining momentum as evidenced by 2026 being the first year since 2018 that leasing activity in
each of the first three quarters exceeded 3 million square feet.
AVERAGE LEASE TERM INCREASED
Average lease term increased slightly from 91 months (7 years and 7 months) in Q3 2025 to 93 months (7
years and 9 months) in Q3 2026. This also exceeded the Q3 2024 average of 87 months (7 years and 3
months). The steady increase is not surprising given the tightening market, particularly for better quality
space.
THE TEN LARGEST DEALS WERE LED BY RENEWALS AND CLASS A BUILDINGS
Law firms and TAMI (Technology, Advertising, Media and Information) companies are leading leasing activity.
Financial services firms have traditionally been among New York City’s most active office tenants, raising the
question: Why are they not taking more space? One possible explanation is that AI-driven automation may be
reducing staffing needs within financial services firms, limiting headcount growth and, in turn, their demand for
additional office space.
Seven of Manhattan’s ten largest transactions were renewals, nine were direct leases, and nine took place in Class A buildings. Six transactions involved expansions, two involved reductions, and two maintained the tenants’ existing footprints. The high percentage of renewals and expansions speaks to a strong belief in the future value of Manhattan as an office location combined with a continuing decline in the availability of the most desirable spaces. Proskauer Rose completed the largest transaction of the quarter, a 478,000 square foot renewal and expansion at 11 Times Square. Anthropic followed with a 465,630 square foot relocation and expansion at 330 Hudson Street. Havas Health ranked third with a 254,118 square foot renewal and expansion at 200 Madison Avenue.
Together, the ten largest transactions totalled 2,572,085 square feet, representing approximately 24.1% of quarterly leasing activity.
ASKING RENTS CONTINUED TO INCREASE
Manhattan’s average asking rent increased from $50.99 per square foot in Q2 2026 to $51.27 in Q3, a gain of
approximately 0.55%.
Asking rent was approximately 3.3% above the $49.64 recorded in Q3 2025 but remained approximately 13.6% below the pre-COVID benchmark of $59.32.
Asking rents increased across all three building classes. Class A averaged $61.95 per square foot, Class B averaged $50.78, and Class C averaged $45.14.
The average rents quoted in our reports are based solely on what is published by landlords and/or their agents. An increasing number of landlords have stopped publishing asking rents, which would make the figures significantly higher. We do not impute any rent numbers, unlike many other sources, since those might differ markedly from what landlords may have in mind as a starting point for negotiations.
MIDTOWN SOUTH HAD THE HIGHEST AVERAGE ASKING RENT
Midtown South recorded the highest average asking rent among Manhattan’s three markets at $55.32 per square foot. Midtown ranked second at $50.20, followed by Downtown at $48.50.
Among individual submarkets, SoHo had the highest average asking rent at $71.26 per square foot, followed by Tribeca at $69.78. The Plaza District averaged $64.10, Greenwich Village averaged $63.83, and Grand Central averaged $61.81. As noted in previous reports, some landlords do not publish their asking rents. If they did, the Midtown average asking rent would assuredly be higher than Midtown South.
