NYC Office Development Poised For Biggest Opportunity Since GFC, Landlords Say

Some of New York City’s biggest commercial real estate names are betting that office has not only recovered from its pandemic downturn — it’s entering a brand new era.

Manhattan office leasing volumes are on track to beat prepandemic levels for the first time since 2019 after tenants snapped up almost 21% more square feet in Q3 than the previous quarter.

Landlords like Silverstein Properties and BXP say a series of factors could lead to a development boom, including financial conditions, excitement around best-in-class offices, and owners looking to transform or offload lower-quality buildings.

“To me, it's history repeating itself,” Oxford Properties Head of Global Development Dean Shapiro said at Bisnow’s 2025 New York City State of the Market event, held at 730 Third Ave.

“I liken the current market to what we saw right on the heels of the GFC,” he added, referring to the 2008 global financial crisis. 

Strong demand, low availability and institutional capital’s renewed interest in the asset class mirrors similar circumstances to the ones that allowed Oxford Properties and The Related Cos. to start building Hudson Yards in 2012, Shapiro said.

“We found that if you could build new office space at a reasonable price, that there would be robust demand,” he said. “We basically have ridden that wave now for the last decade or so.”

Office vacancy is down nationally for the first time since 2019, dropping by five basis points to 22.5%, according to a JLL report. NYC's availability is lower than the rest of the nation, with a vacancy rate of just 14.8%, the brokerage’s Q3 data shows.

Manhattan asking rents, while still 5.4% lower than prepandemic, hit their highest average in two years at $79.47 per SF, according to Colliers’ most recent monthly office report. That has resulted in seller demand boosting investment sales, where office overtook retail and multifamily as the darling asset class in Q3, Avison Young research found.

“We are far and away the best-performing market,” BXP Senior Vice President for Development and Investment Rich Monopoli said on stage. “We’re leaning into that thesis.”

Class-A offices are driving the market’s recovery, according to Cushman & Wakefield’s most recent quarterly report. Leasing volume for January through September surpassed every year for the past three decades to reach 29M SF of new leases and renewals combined. Class-A leases made up for more than half of that volume, accounting for 17.9M SF.

Manhattan has just two contiguous 100K SF office spaces left for lease, Sage Realty CEO Jonathan Kaufman Iger said.

And he said any tenants looking for upward of 80K SF on Park or Madison avenues or in the Plaza District north of 42nd Street are out of luck.

Consequently, he said location-driven demand is trickling down into the better-amenitized product that exists — even for lower class offices.

“Rising tides raise all ships,” Kaufman Iger said. “The tenant that's looking at, say, $160 a square foot doesn't necessarily want to be stuck in a building only paying $90 a square foot or what's emblematic of that property.”

Even Third Avenue offices — previously shunned as employers sought offices close to subway stations in a plea to bring workers back to in-person work — are seeing new demand.

And while Lower Manhattan leasing activity is still two to three years behind Midtown, Kaufman Iger said, tenants are increasingly turning to other neighborhoods as they hunt for the magical combination of a newer office building with all the bells and whistles.

Landlords who have heavily invested in amenitizing Lower Manhattan offices — like at Brookfield Asset Management’s Brookfield Place, The Durst Organization’s One World Trade Center, Fosun International’s 28 Liberty and Union Investment’s 140 Broadway — are seeing high demand, Silverstein Properties’ Senior Vice President of Leasing Joseph Artusa said.

“That's translated into activity in the older prewar buildings, also the ones that are in good locations and are heavily amenitized,” he said.

Buyers, too, are back in the game for Manhattan office, lured by the ever-tightening availabilities and steadily rising rents, Tishman Speyer Managing Director and Head of New York Acquisitions Albert Schmool said. And sellers are beginning to offer better pricing than in previous years.

“Part of that is if you are seeing something, whether it's in the data or in your own portfolio, a lot of people's expectation is that the market will continue to get more active and more deals will get done,” he said. “Pricing is only going to get higher from here in this part of the cycle.” 

For Schmool, that points to one direction for the NYC market as it heads into 2026.

“There will be more new office development by square footage and multifamily in Manhattan,” he said.