Midtown Is One Big Lease Away From A Pre-Covid Office Market

Midtown Manhattan is one big lease away from turning back the clock on the pandemic.

The borough’s office market continued its march toward a post-pandemic recovery in August, with leasing staying well above historical averages and available space shrinking to its lowest level in nearly six years.

Tenants inked deals for 3.25 million square feet last month, down 16 percent from July but still 13 percent above the five-year monthly average and 16 percent above the 10-year average, according to a new Colliers report.

The bigger milestone may be in Midtown, where availability has nearly returned to where it stood before Covid upended the office market.

The submarket had 27.86 million square feet of available space at the end of August, just 150,000 square feet more than the 27.71 million square feet available in March 2020.

In other words, one large lease (or several smaller deals) could put Midtown below its pre-pandemic availability.

“Some areas of the market, like Midtown, are already at the doorstep, and one step from crossing over into getting back to the pre-pandemic level of availability,“ said Franklin Wallach, Colliers’ executive managing director of research and business development in New York. ”That is a very big checkmark in terms of recovery.”

Midtown and Midtown South drove virtually all of August’s leasing, with 1.54 million square feet and 1.53 million square feet of deals, respectively.

Havas Health Network led the month with a 254,000-square-foot extension and expansion at 200 Madison Avenue, owned by George Comfort & Sons, Loeb Partners Realty and Jamestown. The City of New York followed with a 174,000-square-foot extension at Vornado Realty Trust’s 260 Eleventh Avenue.

General Atlantic signed the third-largest deal, finalizing a 150,000 square feet deal at Related Companies’ planned office tower at 625 Madison Avenue. KeyBank also renewed and expanded for 113,000 square feet at Rithm Capital’s 1301 Sixth Avenue.

August’s activity pushed Manhattan’s year-to-date leasing volume to 29.91 million square feet, up 9.4 percent from the same period last year. If that pace holds, 2026 would be the city’s strongest year for office leasing since 2000.

At the same time, Manhattan’s availability rate fell 0.2 percentage points to 12.5 percent. Total availability dropped to 65.4 million square feet, the lowest since September 2020. Sublease inventory also continued to drain, falling to 10.07 million square feet, the lowest level since August 2019 and down 22.3 percent year over year.

Average asking rents dipped 0.2 percent from July but remained 4.2 percent higher than a year earlier.

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