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rime Manhattan office towers are flashing “No Vacancy” signs as the city’s vacancy rate, still above pre‑pandemic levels, drops sharply in the most coveted blocks. Savills reports Q3 leasing hit 10.5 million sq ft—20 % higher than Q2—bringing the year‑to‑date total to 32 million sq ft, close to 2019’s 41.5 million sq ft. Colliers logged 1.85 million sq ft in the Plaza District and 1.05 million sq ft at Hudson Yards/Manhattan West. Seventy‑seven percent of leases are relocations, and tenants are expanding 15 % against post‑COVID expectations.
David Falk of Newmark notes 27 million sq ft of active tenant demand, 17 % above 2019, while Bill Elder of RXR warns that supply cannot keep pace. CBRE finds average asking rents flat at $77.45 / ft, with subleases shrinking to 3.1 % of inventory at $57.55 / ft. Jason Muss of Muss Development says conversions to residential and prime space lease‑ups are reshaping the market: “Space exists, but not in a 10‑to‑1 ratio.” Gaby Rosen of RFR Holding observes demand spilling into the broader Class A market, with Park Avenue’s low vacancy and high rents pushing deals into Sixth and Third Avenues.
Waterman Interests and HPS are redeveloping 850 Third Ave’s 605,000 sq ft for $57 million under the M‑CORE program, offering rents in the $70‑$80 / ft range—half to a third of Park Avenue’s rates. Attorney Kathy Younkins notes tenants now have more leverage on side streets. Adam Henick of Current Real Estate stresses the urgency: “Opportunities disappear before they’re on the market.” The Warehouse at 520 W 20th St. in Chelsea, once idle, is now fully leased by Suno.ai and Wix at mid‑$150 / ft, featuring a Morris Adjmi‑designed glass penthouse. Adjmi also designed the 58,000 sq ft former Samsung building at 837 Washington St., now leased by Bilt with $6.5 million in renovation tax credits.
AI firms are rapidly expanding, often needing double or triple the space they sign for, prompting brokers to work closely on space planning. At Gary Barnett’s 570 5th Ave., IKEA is investing 70,000 sq ft at the base, while a potential 700,000 sq ft lease by Simpson Thacher & Bartlett is eyed for the new tower, designed by KPF and backed by a $292 million IKEA investment. Simpson’s current lease at 425 Lexington Ave. (purchased by Vanbarton Group in 2018) runs until 2033, with a rent bump in 2028. Vanbarton, known for converting offices to apartments, has not disclosed future plans for the property.
Brokers like Jonathan Mazur of Newmark predict that when a prime tenant vacates, the space will quickly be backfilled by other tenants seeking growth, especially given the building’s proximity to Grand Central.
