Years after pandemic-driven disruption, New York City’s office market isn’t just recovering — it’s showing promising signs of sustained growth. Per Avison Young, as reported by GlobeSt and WolfCRE, Manhattan leasing activity in Q3 2025 reached approximately 23.1 million square feet, a 25% increase year-over-year, while availability dropped to 18.7% — the lowest level since early 2021. The quarter saw 25 leases over 100,000 square feet, underscoring continued demand across a wide range of industries.

From a tenant preference perspective, the “flight to quality” remained the defining trend in Q3. Large, amenity-rich Trophy and Class A+ properties captured a disproportionate share of demand, with major deals including Verizon’s 200,000-square-foot lease at Penn 2 and Latham & Watkins’ roughly 120,000-square-foot lease at 1285 Avenue of the Americas. While Class A assets thrived, many Class B and C buildings continued to face competitive pressure, with owners increasingly turning to retrofits and modernization to remain viable.

Even tenants not targeting trophy-class buildings are prioritizing amenity-rich spaces when evaluating leases. Features in demand include:

  • Employee-focused amenities such as gyms, cafés, and flexible meeting spaces.
  • Premium locations with onsite services that support daily operations and work-life balance.
  • Adaptable office environments that can evolve with changing needs.

 

One of New York City’s most notable repositioning projects is the new global headquarters of JPMorgan Chase at 270 Park Avenue. According to Structures Insider, the 60-story, 1,388-foot skyscraper will deliver 2.5 million square feet of LEED Platinum-certified office space, powered entirely by hydroelectric energy. Designed to accommodate about 10,000 employees, the state-of-the-art tower is slated for completion in late 2025.

The project stands as a marquee example of the city’s shift toward sustainable, future-ready workplaces — a trend that continues to attract major corporate tenants and global capital. That momentum is reinforced by foreign investors returning to New York’s real CRE market in large numbers. The Wall Street Journal reports that Saudi Arabia’s Public Investment Fund (PIF) has taken a two-thirds stake in a neighboring development site near Central Park, partnering with Related Companies on a $1 billion-plus project that’s being re-envisioned as a Class A office tower to meet demand for top-quality space.

As New York City’s office leasing volume climbs past pre-pandemic benchmarks, developments like 270 Park Avenue are helping redefine the standard for post-COVID CRE, prioritizing energy efficiency, flexibility, and long-term resiliency in an increasingly competitive global market.

“Today’s companies need more than just four walls to stay ahead of the competition, “KBS CEO Marc DeLuca wrote in Forbes. “These businesses also expect their landlord to go above and beyond, offering the extras that ensure their success, which is much more likely to be found at Class A properties.”

Public investment is contributing to Manhattan’s momentum. In May 2025, Mayor Adams announced more than $400 million in city funding for the Future of Fifth project — a pedestrian-centered redesign of Fifth Avenue from Bryant Park to Central Park. Construction is scheduled to begin in 2028, according to the City of New York.

Megaprojects like 270 Park Avenue and civic initiatives such as the Future of Fifth seem to indicate renewed investor and public confidence. For a sector that’s gone through the metaphorical equivalent of being chewed up by the economy — it now appears to be biting back.

Learn more by visiting KBS.com/Insights.