Manhattan Q4 office leasing was strongest in 6 years

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Office leasing in Manhattan surged substantially higher in the fourth quarter of 2025, driven by continued return-to-office and increased tech hiring, especially for artificial intelligence.

Leasing increased by more than 25% from the third quarter to 11.87 million square feet, according to Colliers. Demand was 16% higher year over year, close to 52% above the five-year quarterly average and 43.5% above the 10-year average.

It was the island’s strongest single quarter of leasing since the fourth quarter of 2019, Colliers found. For all of 2025, leasing volume was the highest since 2019 and just 2.4% below 2019’s pre-pandemic total. 

“Manhattan’s strong performance in 2025 was not out of the blue, but was instead the continuation of a recovery that we began to feel in 2024,” said Frank Wallach, executive managing director for New York research and business development at Colliers.

“Demand in 2025 was a continuation of that trend, though greatly accelerated by factors such as tenant flight to quality to attract and retain talent, return-to-office trend implementation, sizeable expansions by major tenants – such as Amazon, NYU and BlackRock – and the emerging AI industry leasing space throughout Manhattan,” he said.

Wallach also noted an uptick in demand from various industries, including finance, tech, legal, education, medical nonprofit and government. 

The supply of available office space is still much higher, up nearly 37%, than it was at the start of the pandemic in March 2020, but much lower than the post-pandemic peak in February 2024, according to Colliers. As demand rises, the oversupply is slowly being absorbed, and Manhattan now has the tightest supply since November 2020.

Tighter supply is helping to finally boost rents. Manhattan’s average asking rent was 1.5% higher in Q4 than the previous quarter and, at $76 per square foot, was Manhattan’s highest average since October 2020, Colliers found. For the highest level, so-called Class A product, which is newer construction, the average asking rent increased 1.6% to $83 per square foot, Colliers said. 

Class B office product is older but tends to be in good locations. It is now seeing landlords invest in upgrades and renovations as demand increases. That helped rents in Q4 grow 1.1% to a record high of $68.61 per…