2023 Year-End Review of Office Leasing in Manhattan

As another year ends, the Manhattan office market shows a strong story of bouncing back, changing to meet new needs, and staying hopeful even when the economy and work environments are changing. Despite facing challenges, including a marked decline from the previous year’s leasing activity, the final chapters of 2023 painted a picture of robust demand, significant transactions, and a pivotal moment of positive net absorption — a first since 2018.  2023 Year-End Review of Office Leasing in Manhattan

This year-end review delves into the intricate dynamics of Manhattan’s office leasing trends, supported by comprehensive data and insights from leading real estate research firms, including Transwestern Real Estate Services (TRS), JLL, CBRE, and insights from GlobeSt.com and Real Estate In-Depth. Together, these views shed light on a market that’s changing, making its way through today’s tricky economic situation and preparing for what’s coming in 2024.

Market Overview

The Manhattan office leasing scene in 2023 unfolded against a backdrop of economic recalibrations and evolving workspace demands, showcasing a mix of challenges and resilience. Throughout the year, the market witnessed a total leasing activity of 25.8 million square feet according to research from Transwestern Real Estate Services (TRS). This figure represents a notable decrease of 19% from 2022, reflecting the market’s response to broader economic pressures and a re-evaluation of office space needs by businesses. Despite this downturn, the underlying currents suggest a market adapting to new realities, with specific sectors and deal sizes maintaining robust activity levels.

A closer examination of the year’s leasing activity reveals a diverse landscape of demand, driven largely by sectors such as legal services, financial services, and healthcare. The presence of significant leases, including those exceeding 50,000 and 100,000 square feet, underscores a continued appetite for substantial office spaces within key industry players. These trends not only highlight the market’s capacity to attract and retain major tenants but also its pivotal role in accommodating the evolving needs of a broad tenant base.

Q4 Performance: A Detailed Look – 2023 Year-End Review of Office Leasing in Manhattan

The final quarter of 2023 stood out as a period of heightened activity within the Manhattan office leasing market, signaling a vibrant close to the year. With a total of 8.6 million square feet leased, the fourth quarter showcased a marked increase from earlier quarters, buoyed by several large-scale transactions and a general uptick in leasing momentum. 2023 Year-End Review of Office Leasing in Manhattan

This surge in activity was epitomized by the largest lease of the year, signed by Paul, Weiss, Rifkind, Wharton & Garrison. The law firm’s commitment to a 765,000-square-foot space not only represented the largest lease in the U.S. during 2023 but also served as a beacon of market strength and potential. Furthermore, according to TRS Manhattan Office Market Q4 2023 Report, the quarter saw more than 25 leases exceeding 50,000 square feet, including over a dozen surpassing the 100,000-square-foot mark, contributing significantly to the quarter’s robust figures.

The Q4 performance was also indicative of a broader trend of positive market absorption, with approximately 1.9 million square feet of positive absorption recorded in back-to-back quarters, reflecting a healthier balance between supply and demand. This resurgence in leasing activity, coupled with substantial transactions, depicts a Manhattan office market that is not only recovering but also thriving in areas, setting a slightly positive tone for the year ahead.

Yearly Highlights – 2023 Year-End Review of Office Leasing in Manhattan

The Manhattan office leasing market in 2023 was marked by several landmark transactions that not only shaped the leasing landscape but also signaled strategic shifts within key sectors. Among the standout deals was the relocation of Paul, Weiss, Rifkind, Wharton & Garrison to a 765,000-square-foot office space, marking the largest office lease in the U.S. during the year. This significant move by a leading law firm underscores the legal sector’s ongoing commitment to maintaining a prominent presence in Manhattan. Other major leases included MetLife’s  400,000-square-foot deal ,the NYC Administration for Children’s Services signing for 538,000 square feet, and Weill Cornell Medicine’s 296,100-square-foot lease, showcasing the diverse demand across various industries​​.

The year also saw more than 25 leases signed for spaces exceeding 50,000 square feet, with over a dozen of these deals surpassing the 100,000-square-foot threshold. Such transactions highlight the sustained interest in large office spaces, contributing significantly to the year’s overall leasing volume. These achievements, along with the lively activity of the quarter, create an image of a Manhattan office market known for smart, valuable deals that meet the changing needs of a wide range of tenants. 2023 Year-End Review of Office Leasing in Manhattan

Rent Trends

As the Manhattan office market navigated through 2023, rent trends offered insight into the evolving dynamics of supply and demand. The year witnessed a slight dip in asking rents from the third quarter yet ended on a positive note with a year-over-year increase of 1.8%, closing at $74.09 per square foot. This incremental growth reflects a cautiously optimistic market environment, balancing the impacts of economic pressures with the intrinsic value of Manhattan’s office spaces​​.

According to JLL’s Year-End 2023 report, the expansion of the high-end market segment was particularly noteworthy, with 80 buildings now charging rents in excess of $100 per square foot, led by the iconic One Vanderbilt at $247 per square foot. This trend not only illustrates the premium placed on prime office locations but also signals a “trickle-down” recovery, as the demand for luxury spaces continues to shape the market’s upper echelons​​.

Manhattan office tenants signed 192 leases in 2023 with starting rents of $100 or more, equaling 26% of the overall leasing activity in the borough for the year. This segment’s growth is attributed largely to the financial services sector, which was involved in 80% of the $100+ leasing deals, showcasing the sector’s bullish outlook on premium office spaces amidst a recovering market. The inclusion of new buildings into the $100+ club, such as 50 Ninth Avenue and 555 Greenwich Street, further emphasizes the market’s capacity for high-end expansion and the ongoing competition for top-tier office spaces​​.

Sector-Wise Performance

Finance and Legal Services Leasing
2023 Year-End Review of Office Leasing in Manhattan_1

Figure 1- Finance and Legal services leading the leasing activity. Source: AVANT by Avison Young

Financial services continued to exert a strong influence on the market. JLL’s Year-End 2023 report noted that Manhattan office tenants signed 192 leases with starting rents of $100 or more per square foot in 2023, with a significant portion of these high-value transactions being driven by financial institutions. This reflects the sector’s ongoing demand for premium, strategically located office spaces that bolster their operations and corporate image​​.

The legal sector, highlighted by the monumental lease of Paul, Weiss, Rifkind, Wharton & Garrison, reaffirmed its status as a major occupant of Manhattan office space. This sector’s willingness to commit to large-scale, long-term leases signals confidence in the value of a Manhattan address for prestigious law firms​​.

Healthcare and technology sectors, though less dominant than financial services and legal, also contributed to the leasing activity, reflecting a broader diversification of Manhattan’s tenant base. Large leases by entities like Weill Cornell Medicine illustrate the growing footprint of healthcare institutions in the market, seeking spaces that can accommodate their unique needs for research, administration, and patient care​​.

The High-End Market’s Expansion

The expansion of the high-end office market in Manhattan emerged as a noteworthy trend in 2023, with a record number of buildings charging rents in excess of $100 per square foot. According to Globest, the elite club of office towers demanding premium rents expanded to encompass 80 buildings, illustrating the market’s robust appetite for luxury and prestige. One Vanderbilt, leading the pack, set a new benchmark with rents at $247 per square foot, showcasing the premium that tenants are willing to pay for state-of-the-art amenities and prime locations​​.

This trend underscores a “trickle-down” recovery process, where the strength of the high-end market begins to influence broader market dynamics. As demand for premium office spaces remains high, with significant leasing activity from financial services and other sectors, the scarcity of new developments in this segment is poised to create a tighter market, potentially pushing more tenants to consider premium options.

The financial services sector played a dominant role in this trend, being involved in 80% of the leasing deals over $100 per square foot. This concentration highlights the sector’s preference for and influence on the premium market, emphasizing the status and strategic advantages that such spaces confer​​.

Moreover, the addition of new buildings to the $100+ club, including 50 Ninth Avenue and 555 Greenwich Street, reflects the ongoing evolution and competitiveness of Manhattan’s high-end office market. It’s not just about the amenities and services; location continues to be a crucial factor, with tenants valuing the prestige and connectivity that come with these prime addresses​​.

In their Q4 2023 Manhattan Office Insights report, AVANT by Avison Young noted that Trophy and Class A properties, which make up just the top 25% of office inventory, represented a major 70.0% of the demand in 2023.

2023 Year-End Review of Office Leasing in Manhattan_2
2023 Year-End Review of Office Leasing in Manhattan_2

Figure 2- High end market’s expansion as seen in Trophy and Class A properties. Source: AVANT by Avison Young

Challenges and Opportunities

The Manhattan office leasing market faced its share of challenges in 2023, navigating through economic uncertainties and evolving workspace demands. However, these challenges also presented opportunities for adaptation and growth, signaling a dynamic period for the real estate sector.

Economic Uncertainties – 2023 Year-End Review of Office Leasing in Manhattan

The fluctuating economic landscape posed a significant challenge, influencing tenant decisions and market dynamics. As businesses grappled with inflation, interest rate hikes, and geopolitical tensions, some hesitated to commit to new leases, leading to the observed decline in total leasing activity compared to the previous year​​. Despite these uncertainties, the market witnessed a rebound in Q4 2023, suggesting a resilient demand for office space amidst fluctuating economic conditions.

Decline in Total Leasing Activity
2023 Year-End Review of Office Leasing in Manhattan_3

Figure 3- Decline in total leasing activity compared to 2022. Source: Newmark Research

Shifts in Tenant Preferences

Another challenge was the shift in tenant preferences, particularly towards remote and hybrid work models after March 2020. Although hiring efforts for office-using positions are slightly above the levels observed in March 2020, the job postings have experienced a sharp decline in late 2023. This shift has led to a reevaluation of space needs, pushing some businesses to downsize or opt for more flexible office solutions. However, this challenge also opened opportunities for landlords to innovate and offer more flexible lease terms, retrofit spaces for health and wellness, and invest in technologies that cater to a changing workforce​​​​. 2023 Year-End Review of Office Leasing in Manhattan

2023 Year-End Review of Office Leasing in Manhattan_4
2023 Year-End Review of Office Leasing in Manhattan_4

Figure 4- Shift in tenant preferences towards remote work models. Source: AVANT by Avison Young

Renewal over Relocation

2023 Year-End Review of Office Leasing in Manhattan_5
2023 Year-End Review of Office Leasing in Manhattan_5

Figure 5- Increased trend of Relocation in Big Tenets. Source: AVANT by Avison Young

Looking Ahead: 2024 and Beyond

As we gaze into the future of Manhattan’s office leasing market, several factors are likely to influence its trajectory.

Economic Recovery and Market Adaptation

The potential for economic recovery and stabilization in 2024 could bolster business confidence, leading to increased leasing activity. As the market adapts to the post-pandemic reality, we may see a surge in demand for office spaces that accommodate new ways of working, emphasizing flexibility, technology integration, and employee well-being​​.

Scarcity of Premium Spaces

The limited new construction and the growing scarcity of premium office spaces are expected to create a competitive market for high-end leases. This scarcity could drive up rents for the best spaces and encourage more development projects, albeit cautiously, given the lessons learned during the pandemic​​.

Increased Trend of Relocation
2023 Year-End Review of Office Leasing in Manhattan_6

Figure 6- Limited new construction in 2023. Source: TRS Manhattan Office Market Q4 2023 Report

The Rise of Hybrid Work

The normalization of hybrid work models will necessitate a reimagining of office spaces, focusing on collaboration, flexibility, and connectivity. Landlords and developers who can create environments that support these models will likely see increased interest from businesses looking to attract and retain talent by offering a compelling and adaptive workspace​​​​.

Looking ahead, the Manhattan office leasing market is poised for a period of transformation and growth, driven by economic recovery, technological advancements, and evolving tenant needs. The challenges of 2023 have laid the groundwork for innovative solutions and strategic adjustments, setting the stage for an exciting and dynamic future in one of the world’s premier real estate markets.


The Manhattan office leasing market’s journey through 2023 was a testament to its resilience and adaptability in the face of shifting economic landscapes and evolving workplace norms. Despite a year-on-year decrease in total leasing activity, the market demonstrated remarkable strength in the fourth quarter, buoyed by significant transactions and a trend towards positive net absorption. The diversity of demand across sectors, including legal, financial services, and healthcare, underlined the market’s capacity to serve a broad tenant base, even as preferences shifted towards flexibility and technological enhancement.

Looking ahead to 2024 and beyond, the Manhattan office leasing market stands at a pivotal juncture. Economic recovery, coupled with the market’s response to ongoing challenges, will shape the future landscape of office leasing in Manhattan. The drive towards technological integration, and flexible workspaces will likely continue to be major themes, influencing development strategies and tenant decisions. As the market evolves, it will undoubtedly continue to reflect the dynamism and resilience that have long characterized Manhattan’s commercial real estate sector.

Additional Resources – 2023 Year-End Review of Office Leasing in Manhattan

For further reading and a more in-depth analysis of the Manhattan office leasing market, the following reports and resources provide comprehensive insights:

  • Transwestern Real Estate Services (TRS) Q4 2023 Manhattan Office Report: A detailed analysis of leasing activity, absorption rates, and market trends in Manhattan for the fourth quarter of 2023. View the report
  • JLL’s Year-End 2023 Report: Offers insights into the high-end office leasing market, including a list of buildings charging over $100 per square foot and analysis of sector-wise performance. Read more
  • AVANT by Avison Young Manhattan Q4 Report: Provides a comprehensive overview of leasing activity, availability rates, and rent trends in Manhattan, alongside a sectoral breakdown. Explore the findings

These resources offer valuable perspectives on the state of the Manhattan office leasing market, providing stakeholders with the data and analysis needed to navigate the complexities of the commercial real estate landscape in New York City.

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