Manhattan, N.Y., Office Rents Climb as Demand Outruns Quality Supply

Office demand in Manhattan, N.Y., has been outpacing the supply of large, high-quality office spaces and pushing rents higher.

Manhattan office rents rose 3% in the first half of 2026 with prime space carrying a 10% to 15% premium, according to a CBRE report. Specialists estimate within the same report that asking rents will continue gaining momentum and are expected to rise 5% to 6% by the end of the year.

A key driver is demand from large tenants, which is more than 30% higher than the 2018–2019 average. Specifically, finance, law and technology firms are leading the way with AI-related companies accounting for more than half of Midtown South tech leasing in the first quarter.

The squeeze is especially acute for blocks of 100,000 square feet or more. Accordingly, CBRE representatives expect Manhattan’s office vacancy rate to fall 2 to 2.2 percentage points in 2026, which is more than initially forecasted. Recent deals reflect the trend, such as American Express at Two World Trade Center, Simpson Thacher at 570 Fifth Ave. and McDermott Will at 343 Madison Ave.

Retail shows the same strain: Apparel and food-and-beverage tenants took roughly 650,000 square feet in the first half of the year; availability along SoHo and Madison Avenue is nearing multi-year lows; and SoHo asking rents have hit record highs on sustained luxury demand.