Office Leasing in Lower Manhattan Makes Progress for Third Consecutive Quarter

For the third consecutive quarter, Lower Manhattan’s office market posted encouraging leasing totals, according to the Alliance for Downtown New York’s report on the neighborhood’s real estate market. For the year to date, Lower Manhattan has posted its highest leasing total for any year since 2019 at 3.18 million square feet. While previous strong quarters post-pandemic have been driven by one or two large deals, Q3 was fueled by a high number of smaller deals, demonstrating a broader upturn in market activity. 

Lower Manhattan recorded 990,000 square feet of new leasing in the third quarter, 45% above the Q3 2024 total and 39% higher than the five-year average. So far, the current year-to-date figure of 3.18 million square feet is on track to surpass 2016’s year-end leasing total, which would signify the first time a post-pandemic year surpassed a pre-pandemic year. While market activity was driven by a high volume of smaller deals, the two largest leases were GFI Group’s 128,749 square-foot lease at 55 Water St. and the New York City Department for the Aging’s 109,283 square-foot deal at 14 Wall St. Also of note, five tenants relocated to Lower Manhattan during the third quarter. 

Vacancy rates inched down for the seventh consecutive quarter, falling to 22.5%. Although vacancies remain relatively high compared to the pre-pandemic era, the year-over-year improvement is notable, with a 1.9% drop compared to Q3 2024. In addition, for the second consecutive quarter, office asking rents increased, marking the first time the district has seen asking rents increase for two consecutive quarters since 2018. 

“There is encouraging movement in the office market this year and we are hopeful that this momentum continues,” Downtown Alliance president Jessica Lappin said.

The retail scene experienced another robust period with 28 new establishments opening their doors in Lower Manhattan in the third quarter. New openings included the long-awaited debut of Socceroof, a 20,000 square-foot indoor soccer complex in a converted office space at 28 Liberty St. Also of note, retro arcade bar chain Barcade opened its biggest location yet at 10 Cortlandt St., which includes over 80 game machines. Neighborhood favorite the Paris Cafe also re-opened at 119 South St. 

Lower Manhattan’s hospitality continued to thrive with a successful Q3. Hotels in the district reached a new Q3 record by finishing with a $330 ADR and 88% occupancy rate. Lower Manhattan’s hotels are outpacing Midtown’s occupancy, which was at 84% for the quarter, and the citywide rate, which is 78%. The current hotel inventory for the neighborhood stands at 8,534 rooms across 44 hotels. 

Read the full report here.