New York City Commercial Office Space for Rent

Q4 2025

New York City Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The New York City commercial real estate (CRE) market is closing 2025 with renewed momentum, characterized by a "flight to quality" across all sectors [1, 5]. The Office market is seeing a notable rebound in leasing activity for trophy assets, leading to positive net absorption for the first time in recent years [1, 4]. Industrial fundamentals are moderating as new supply enters the market, causing a temporary uptick in vacancy [2, 6]. Retail remains resilient with vacancy tightening in prime corridors, while the Multifamily sector continues to outperform as one of the tightest markets in the nation due to chronic supply constraints [7, 10].

TenantBase Proprietary Data [14] highlights the distribution of active tenant demand over the last 90 days:

  • Retail/Storefront dominated market activity with 59.23% of all searches [14].
  • Office was the second most active sector at 21.02% [14].
  • Warehouse accounted for 20.60% of total search volume [14].

Office Market

Market Overview Manhattan's office sector is actively recovering, defined by a distinct bifurcation where top-tier assets are capturing the majority of demand [1, 3].

  • Vacancy & Availability: The vacancy rate in Manhattan has improved to approximately 14.7% to 22.0%, depending on the asset class and submarket, as leasing activity outpaces new supply [1, 4]. Sublease availability has dropped significantly, falling below 10 million SF in Midtown for the first time since 2020 [4].
  • Net Absorption: The market recorded positive net absorption of 5.77 million SF in Q3 2025, a sharp increase from previous quarters, driven largely by robust leasing in Class A properties [1, 4].
  • Rental Rates: Average asking rents held steady at $72.55 per SF, with Class A rents in Midtown South reaching record highs of over $83.00 per SF [1, 4].
  • Market Drivers: Leasing activity surged to nearly 23 million SF year-to-date, the highest volume in over 30 years for the January-to-September period [1, 4].

TenantBase Activity [14]

  • Demand Share: Office accounted for 21.02% of total search volume [14].
  • Lease Term Preference: Demand is heavily skewed toward short-term flexibility [14]:
    • Less than one year: 37.21% of deals [14].
    • 2-3 Years: 27.91% of deals [14].
    • 5+ Years: 13.95% of deals [14].
  • Size Requirements: Tenants seeking flexibility require smaller footprints. The average lower SF required for a Less than one year term is 1,354 SF, compared to 1,168 SF for a 3-5 Years term [14].

Industrial & Warehouse Market

Market Overview The NYC industrial market is navigating a supply-driven recalibration, with vacancy rates rising to their highest levels since the early 2020s despite steady leasing velocity [2, 8].

  • Vacancy & Rent: Vacancy ticked up to 6.4% in the city and 6.2% in the outer boroughs as new developments were delivered [2, 6]. Average asking rents have softened slightly to $27.65 per SF in the outer boroughs due to the influx of lower-cost space [6].
  • Demand & Supply: Leasing velocity slowed by 51% quarter-over-quarter, though year-to-date activity remains 32% higher than 2024 levels [2, 6]. Net absorption turned negative as new supply outweighed immediate tenant demand [2].
  • Construction: The development pipeline is winding down, with construction starts falling below long-term averages, which is expected to help vacancy stabilize in 2026 [2, 8].

TenantBase Activity [14]

  • Demand Share: Warehouse accounted for 20.60% of total search volume [14].
  • Lease Term Preference: Demand is well-distributed across short and mid-term options [14]:
    • 1-2 Years: 27.96% of deals [14].
    • 3-5 Years: 23.66% of deals [14].
    • 5+ Years: 22.58% of deals [14].
  • Size Requirements: The average lower SF required for a 3-5 Years term is 3,125 SF, while the 5+ Years term average requirement jumps to 8,286 SF [14].

Retail Market

Market Overview New York City's retail sector has stabilized, with net absorption swinging back to positive territory and availability tightening in prime corridors [3, 9].

  • Vacancy & Availability: The retail vacancy rate in Manhattan fell to 5.1%, marking the seventh consecutive quarter of decline [3]. Lower Manhattan saw its vacancy rate drop to 22.5%, the lowest in years [5].
  • Net Absorption: Demand turned positive with 4.7 million SF absorbed nationally, reflecting a trend mirrored in NYC as retailers backfill vacated spaces [9].
  • Rental Rates: Asking rents in prime Manhattan corridors averaged $145.35 per SF, while Lower Manhattan saw rents rise for the second straight quarter to $56.40 per SF [3, 5].

TenantBase Activity [14]

  • Demand Share: Retail/Storefront activity dominated with 59.23% of all search volume [14].
  • Lease Term Preference: Retail tenants show a decisive preference for long-term stability [14]:
    • 5+ Years: 38.81% of deals [14].
    • 3-5 Years: 22.89% of deals [14].
    • 1-2 Years: 14.43% of deals [14].
  • Top Locations: Tenant interest is highest in the following boroughs [14]:
    • Manhattan [14].
    • Brooklyn [14].
    • Queens [14].

Multifamily Market

Market Overview The NYC multifamily market remains exceptionally tight, characterized by high barriers to entry and sustained renter demand [7, 10].

  • Vacancy & Occupancy: The vacancy rate held at a low 3.4%, far below the national average, supported by strong absorption [7, 10].
  • Rents & Concessions: Asking rents rose 2.5% year-over-year to an average of $3,400 per unit [7]. However, rent growth has flattened slightly in recent months due to affordability ceilings [7].
  • Construction: The pipeline has contracted sharply, with units under construction down 39%, reinforcing the market's supply-constrained nature [7, 11].
  • Investment: Sales volume reached $3.7 billion in Q3 2025, with institutional capital aggressively targeting free-market assets in Manhattan and Brooklyn [7].

2026 Outlook

Looking ahead to 2026, New York City is positioned for a year of "optimism and resilience" [12].

  • Office Tightening: With the construction pipeline at its lowest level since the 1990s, high-quality office space will become increasingly scarce, driving rents higher for trophy assets [13].
  • Investment Rebound: Capital confidence is returning, with 70% of investors planning to increase acquisition activity in 2026 [12].
  • Sector Leaders: Multifamily and industrial assets remain top targets, but renewed interest in well-located retail and data centers is expected to diversify investment portfolios [12, 13].

Sources

  1. Lee & Associates: Q3 2025 New York, NY Office Market Report
  2. CBRE: New York City Industrial Figures Q3 2025
  3. Tri State Commercial: CRE Lease Report Q3 2025 - Manhattan
  4. Cushman & Wakefield: Manhattan Office MarketBeat Q3 2025
  5. Alliance for Downtown New York: Lower Manhattan Real Estate Overview Q3 2025
  6. Cushman & Wakefield: NYC Outer Boroughs Industrial MarketBeat Q3 2025
  7. Matthews: New York, NY Multifamily Market Report Q3 2025
  8. Matthews: New York, NY Industrial Market Report Q3 2025
  9. JLL: United States Retail Market Dynamics Q3 2025
  10. Cushman & Wakefield: U.S. Multifamily MarketBeat Q3 2025
  11. GREA: Market Insights | Q3 2025 | New York City
  12. Cushman & Wakefield: Commercial RE Market to Shift in 2026
  13. First Class Management: Trends to Watch in NYC Commercial Real Estate for 2026
  14. TenantBase Proprietary Market Data (New York City - Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.