Manhattan Office Market Tightens as Leasing Hits Multi‑Decade Highs

Overview

• Leasing in the first half of 2026 reached just under 23 million square feet, with about 11.02 million square feet signed in Q2, the strongest six‑month pace since 2002 and putting the market on track for its busiest year since 2000.
• Large law firms and technology occupants led the largest deals in Q2, including Simpson Thacher’s roughly 916,000‑square‑foot prelease, and AI-related users took about 800,000 square feet in the quarter.
• Manhattan availability tightened to about 13 percent in Q2 even as roughly 68 million square feet remains technically available, and more than 900,000 square feet was removed from inventory for office‑to‑residential conversions that create spillover demand for other buildings.
• Greater Los Angeles showed measurable improvement with nearly 4 million square feet leased in Q2 and sublease inventory falling to about 6.7 million square feet, but overall availability stays high and landlords continue to offer large concessions.
• The shift toward tighter supply, rising asking rents and active conversion and investment activity is restoring landlord leverage, which will likely raise effective occupier costs and shape where tenants choose to renew, expand or relocate.