Manhattan’s Office Market Sees Its Best Start Since 2014

• Empire State of leasing: New data shows the growth in NYC office leasing even as other metros stagnate.

• Big beautiful affordability: The new version of the Big Beautiful Bill has some interesting new incentives for building and owning affordable housing.

• Ban together: The Supreme Court has declined to hear the pandemic eviction ban lawsuit.

Office

Manhattan’s Office Market Sees Its Best Start Since 2014

Manhattan’s office leasing market has delivered its strongest first half performance in over a decade, with 21.1 million square feet leased through June 2025, surpassing any other H1 since 2014. This resurgence signals a broad-based demand rebound, reversing the pandemic-era narrative that only top-tier towers would thrive. According to new Savills data, activity is now extending across all building classes, suggesting that Manhattan’s office sector may be on a firm path to structural recovery.

The heart of this comeback lies in a surge in leasing of lower‑tier assets: Class B and C properties now account for nearly 45 percent of Q2 deals, up from 35 percent a year ago. This shift reflects a growing preference among tenants for hybrid-ready, cost‑effective options—not just trophy towers. Meanwhile, Manhattan’s availability rate has tightened meaningfully to 17.2 percent from 20 percent year-over-year, with sublease inventory shrinking by over six million square feet. The combination of sustained leasing volumes and falling inventory underscores a market trending firmly in favor of landlords.

Rent trends back these fundamentals: Class A asking rents rose modestly, 0.8 percent quarter-over-quarter, including a 1.5 percent hike in Midtown. High‑profile leases such as NYU’s million-square-foot deal at 770 Broadway and Amazon’s 330,000 square feet at Fifth Avenue illustrate that demand is holding across sizes and sectors. Yet, disparity remains: prime submarkets like Hudson Yards, Union Square, and Plaza South report around 12 percent availability, contrasting sharply with 20 percent-plus in the Financial District and City Hall areas. With total inventory also declining due to demolitions and conversions, the central question is whether macroeconomic uncertainty or evolving workplace habits could derail momentum in the second half of the year.

Overheard

Affordable Housing Could Get a Boost from the "Big Beautiful Bill"

The One Big Beautiful Bill Act—the Trump administration’s sweeping tax-and-spending package—proposes historic changes to the Low-Income Housing Tax Credit (LIHTC) program and Opportunity Zones. Under its House iteration, 9% credit allocations would be boosted by 12.5% for four years, while the Senate’s version would make a 12% increase permanent. Cutting the private activity bond financing threshold from 50% to 25% unlocks 4% credits for more developments, and the House version rings in additional incentives for rural and tribal projects—a rare nod to overlooked regions.

Both chambers support extending Opportunity Zones, but they tighten eligibility to prioritize the most underserved census tracts and amplify incentives for rural investment. The House also mandates that a third of new zones target rural communities—an explicit shift away from urban focus. Still, critics warn tax tweaks alone won’t suffice. They say the program needs deeper infrastructural support and more flexible investment timelines to adequately support housing builds.

These enhancements are more than just financial tweaks—they’re a powerful magnet for real estate developers and institutional investors. As seasoned players in the affordable housing sphere affirm, the expansion isn't only a win—it’s a cue to revisit and ramp up pipelines. By some estimates the changes could spur financing for roughly 527,000 new units by 2029. With bonus depreciation restored and bond hurdles lowered, the structural economics are now more aligned in favor of affordable housing development, potentially increasing long-term sector commitment.

Supreme Court Deals Blow to Landlords, Declines to Hear Eviction Ban Case

The U.S. Supreme Court has declined to hear a case brought by Los Angeles landlords challenging the city’s pandemic-era eviction ban, effectively upholding lower court rulings that sided with the city. 

The appeal, led by a luxury apartment management company and 13 affiliated owners and partnerships representing nearly 5,000 units, argued that the city of Los Angeles owed them compensation for more than $20 million in unpaid rent accumulated between 2020 and 2024.

The landlords claimed the city’s eviction moratorium was so restrictive that it amounted to an unconstitutional taking of private property without just compensation. Both a federal district judge and the 9th U.S. Circuit Court of Appeals rejected that argument, emphasizing that the “takings clause” is not triggered when a law merely modifies the landlord-tenant relationship.

While Justices Clarence Thomas and Neil Gorsuch indicated they would have heard the case, the majority declined, leaving the 9th Circuit’s decision intact. Los Angeles officials argued that the measure was a necessary public health response and in line with Supreme Court precedent.

The decision marks a significant moment for cities nationwide, affirming broad local authority to enact emergency tenant protections without immediate financial liability to landlords. It's a legal precedent that may have long-lasting implications for property owners.

Technology

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