The pace of office leasing in Manhattan saw a significant 22 per cent increase in July compared to June's volume. This is attributed to robust demand for office space and brisk activity in Midtown South. According to Colliers' latest market report, 3.87 million square feet of office space in Manhattan was leased, renewed, expanded, or extended last month. This represents an annual increase of 28.4 per cent compared to July 2025.
Strong demand was largely driven by leases from NBCUniversal Media, AON, and Anthropic. Year-to-date, office demand has risen annually by 12.8 per cent to 26.66 million square feet and remains on track for the strongest year since 2000.
Midtown South as a Growth Driver
The office market in Midtown South, in particular, showed exceptional dynamism in July. The submarket contributed nearly half of the total leasing demand last month, despite accounting for only 36.3 per cent of Manhattan's total office inventory. The demand of 1.9 million square feet in Midtown South was significantly boosted by the largest deal of the month at 330 Hudson. There, Anthropic signed a lease for 465,630 square feet for the entire building, owned by AEW Capital Management, in July. This was previously reported by Commercial Observer in April.
Although the current office supply in Midtown South remains above March 2020 levels – a crucial benchmark for the office market's post-pandemic recovery – there are many reasons for optimism, both in Midtown South and across Manhattan. Since the peak of post-pandemic supply in November 2023, available office inventory in Midtown South has been reduced by 36.2 per cent, as stated by Frank Wallach, Executive Managing Director for Research and Business at Colliers. Between June and July, availability there fell by approximately half a percentage point to 12.2 per cent.
Similarly rapid declines were also observed in Midtown and Lower Manhattan. This downward trend in the submarkets is driven by various combinations of high demand, office-to-residential conversions, and a decrease in sublease supply. In July, collective availability in the office market reached its lowest point since September 2020, with 66.24 million square feet of office space available. All submarkets tracked by Colliers – Midtown, Midtown South, and Lower Manhattan – have seen significant declines since their post-2020 oversupply. According to Wallach, all three markets have decreased by about one-third from their post-pandemic peaks.
Outlook for Rents and Recovery
While Midtown South and Lower Manhattan still have ground to make up, overall availability in Midtown today is only 1.6 per cent above March 2020 levels. The absorption rate of office space in Manhattan, which considers both demand and space taken off the market, has slowed compared to the rapid pace of 2025. However, this does not mean a full recovery is unattainable. Approximately 5.5 million square feet of office space in Manhattan was absorbed in the first six months of 2026. Should demand continue at this pace, March 2020 levels could be reached within the next two years. Frank Wallach noted that maintaining this pace would be a challenge.
In addition to demand, rents are also showing signs of recovery. At an average of $78.03 per square foot in July, average Manhattan office rents are only 1.8 per cent below the $79.47 achieved in March 2020. Midtown South, however, has already significantly exceeded its pre-pandemic rental prices. Even if Manhattan's entire office market may not yet signal 'all clear', it is, according to Wallach, "on very solid ground and moving very strongly in that direction."
