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recent report from Colliers reveals a significant surge in Manhattan office leasing, with August seeing a 20% increase to 3.7 million square feet compared to July. This marks a substantial jump above the 10-year monthly average of 2.72 million square feet and suggests that demand will continue at this pace for the remainder of 2025, potentially exceeding 40 million square feet for the first time since 2019.

    Historically, Manhattan's yearly leasing volume averaged around 32-33 million square feet over the past 25 years. However, in 2024, the city returned to this average for the first time since the pandemic began in 2020. Franklin Wallach, executive managing director at Colliers, attributes this strong demand to a return to office, low unemployment, and the reemergence of key industries like tech.

    Amazon's leasing activity is a notable example, with over a million square feet leased since November 2024 through various agreements, including leases, subleases, and enterprise deals with coworking spaces. The legal sector also remains strong, with Manhattan seeing a record year of law firm leasing activity in 2023 and above-average levels in 2024.

    The availability rate for newer office space has dropped to 6.7%, while older buildings remain at 17%. Manhattan's overall availability rate fell to 15% in August, the lowest since January 2021. The average asking rent for Manhattan offices increased by 1% to $74.73 per square foot, with some landlords repricing their existing space higher.

    Office conversions are also having a significant impact on supply and pricing, with nearly 9 million square feet removed from the market over the last four years. This not only reduces supply but also affects demand and prices, as tenants relocate to other buildings. According to Wallach, for every million square feet of office building slated for conversion, around 270,000 square feet of leasing activity occurs due to tenants relocating.