Off-market transactions have long been common practice in the residential real estate sector. Brokers discreetly connect high-calibre buyers with desirable properties even before they reach the public market. Recently, however, this trend has also extended to the commercial real estate market, particularly Manhattan's office market.
Given the dwindling supply of office space and tenants' desire to secure high-quality properties, many office owners in the borough are discreetly keeping spaces off the market. This allows them to quickly bring interested tenants into new leases, as reported by JLL. This strategy stems from necessity. In Manhattan's fast-paced office market, neither landlords nor tenants can afford to take a long time searching or negotiating, even if they wanted to wait for a specific moment or achieve higher rents.
Melanie O’Brien, Head of Research at JLL, explains: "It's less about holding spaces back for the rents they can achieve, and more about the pace of the leasing market. It's not that landlords are waiting for a specific time. Rather, some of the steps they would have taken in the past before a space became available – such as marketing and preparing for a comprehensive launch – are being skipped because tenants are acting very quickly."
Market Dynamics and Demand
Office lettings in Manhattan reached a volume of 10.06 million square feet in the third quarter of 2026, as shown in a report by Colliers. This figure was 16.2 per cent above the five-year quarterly average of 8.66 million square feet and 19.2 per cent above the ten-year average of 8.44 million square feet. Year-to-date demand reached 32.86 million square feet, representing the strongest comparable period since 2000. The third quarter of this year also saw the highest office activity in Midtown South, with a demand increase of 10.7 per cent year-on-year.
The total supply of available space in September was 64.76 million square feet, the lowest figure in Manhattan since August 2020 and 34 per cent below the post-pandemic peak. Kirill Azovtsev, Vice Chairman in Savills' New York office, comments: "Everyone is coming back faster, and suddenly there's no supply." While millions of square feet will enter the market in the coming years through new construction projects – such as Related Companies' 858,500 square foot project 625 Madison Avenue, Related and Oxford Properties' 1.4 million square foot 70 Hudson Yards, or BXP's 930,000 square foot 343 Madison Avenue – this does not deter tenants from aggressively searching for space, especially as supply continues to shrink due to conversions. As a result, deals are concluded faster.
The Allure of Off-Market Transactions
The off-market approach is becoming attractive. Melanie O’Brien states: "What I hear from brokers is the need to make it clear to tenants that if they hesitate or are indecisive, a space will be taken quickly. Some tenants have had bad experiences because of this and are more inclined the next time to act quickly and seek off-market opportunities. It's less about landlords demanding higher prices and waiting. It's mainly a product of the market."
According to Azovtsev, brokers often already know which spaces will become available before they are publicly offered, encouraging landlords to close deals faster. He emphasises: "Our job as brokers is to find these spaces. We try to anticipate potential spaces that might become vacant or where availability might arise. The space is not being withheld. It's more about who finds out first, and then it never comes to market." Most off-market leases concern recently vacated, smaller blocks of space – typically around 5,000 to 20,000 square feet across one or two floors – which landlords need to fill quickly. Some tenants lease these spaces directly, but many sublet the blocks as a last-minute solution, which represents a win-win for landlords seeking a temporary solution.
However, there have also been larger off-market lettings recently. In the building 71 Fifth Avenue, owned by a joint venture of Madison Capital and Lubert-Adler Partners, a space of approximately 30,000 square feet was leased to an artificial intelligence company. This deal not only happened before the space reached the open market but also secured some of the "highest rents" the building near Union Square has ever seen. Spokespeople for Madison Capital and Lubert-Adler Partners did not respond to requests for comment.
Another AI company is discreetly searching for approximately 50,000 square feet in Midtown South. Evan Haskell, Executive Vice President at CBRE, notes: "[AI tenants] are really looking for move-in ready space, and there's very little of that. They are the ones who have to scour the market, find these hidden spaces, and do everything they can because there is so little built-out space for them." AI firms and Midtown South seem to go hand in hand with off-market deals. Many young technology and AI companies quickly need a location and often look in Midtown South, particularly in SoHo or the Meatpacking District, according to Patrick Steffens, Senior Director of Office Leasing at Avison Young. Steffens adds: "There is virtually no good space left in SoHo and the Meatpacking District. The better buildings have the luxury of scarcity, and when things are scarce, what is hidden is attractive from a marketing perspective."
