NYC Office Leasing Hits 22.8 Million SF in H1 as AI Demand Tightens Supply
Updated
Updated · credaily.com · Jul 7
NYC Office Leasing Hits 22.8 Million SF in H1 as AI Demand Tightens Supply
2 articles · Updated · credaily.com · Jul 7
Summary
22.8 million square feet of New York City office leases were signed through June, the strongest first half since 2002 and enough to put Manhattan on pace for its busiest year since 2000.
1.5 million square feet of AI-related leasing and big law-firm deals drove the rebound, including Simpson Thacher & Bartlett’s 916,000-square-foot prelease at 570 Fifth Ave.
13% availability at the end of the second quarter marked the lowest level since October 2020, as more than 900,000 square feet left the market during the quarter for office-to-residential conversions.
$78.03 per square foot in average asking rent was up 5.7% year over year, while newer Midtown buildings fell to 6.7% availability and Park Avenue rents climbed to about $120 per square foot.
6% negotiated discounts to asking rents in early 2026, down from 10% in 2024, show landlords regaining leverage as demand broadens beyond trophy towers and inventory keeps shrinking.
Is New York's push to convert offices to homes creating an affordability crisis for businesses?
As AI companies lease vast offices, could their own technology ultimately make those spaces obsolete?
With landlords regaining power, what negotiation secrets can tenants use to secure a favorable lease?
NYC Office Market Surges in H1 2026: AI Companies Drive Leasing, Vacancy Hits 13% Low
Overview
In the first half of 2026, the New York City office market saw a strong resurgence, highlighted by robust leasing activity and major commitments from companies like American Express. This surge led to declining vacancy rates and rising asking rents, creating a tightening market for both tenants and landlords. The competitive environment especially favored those who were nimble and well-prepared. A key driver of this momentum was the aggressive expansion of AI companies, which secured significantly more office space—often more than their immediate needs—pushing the Class A market to new highs and reshaping the city's office landscape.