The Office Market’s Next Phase Takes Shape in Manhattan

• New York State of office: Manhattan’s office market tightened in 2025 as demand concentrated in Trophy assets, previewing a broader U.S. shift.

• Slum buy back: A bankruptcy court approved Summit’s $451 million purchase of troubled New York City buildings, but the city is still threatening to appeal.

• Rent coin: A Texas homebuilder has received SEC approval to launch a crypto token that rewards renters for paying rent.

Office

The Office Market’s Next Phase Takes Shape in Manhattan

Manhattan’s office recovery looks strong on paper, but what really sets it apart is how differently it’s unfolding compared to most U.S. markets. Leasing surged in 2025 to its highest level since 2019, signaling renewed tenant confidence, yet that momentum is not being spread evenly across the city or the country. New York is not seeing a broad-based return to space; it’s seeing a highly selective one. Tenants are committing again, including to very large leases, but only in buildings that clearly support how they want to operate long term. That dynamic feels familiar across U.S. office markets, but it is showing up faster and more decisively in Manhattan.

Where New York diverges most is in how quickly quality is being rewarded. Trophy buildings are absorbing demand at a pace far beyond the rest of the inventory, capturing a majority of leasing activity and driving down overall availability to its lowest level since 2020. As premium space tightens, urgency is quietly returning and decision timelines are compressing. Other markets are seeing similar preferences on paper, but many lack the depth of demand or density of top-tier assets to translate that preference into real absorption. Even Manhattan’s modest spillover into Class B space mirrors national trends, with gains limited to renovated, well-located buildings rather than the broader stock.

At the same time, Manhattan is not immune to the forces shaping office elsewhere. Tenants are right-sizing, not expanding, and rents remain propped up by concessions rather than true pricing power. Utilization is stronger than the national average, but still well below pre-pandemic norms, underscoring that the office has been recalibrated, not restored. What New York ultimately illustrates is both a contrast and a preview: the same quality-driven recovery many markets are hoping for, but happening earlier, more clearly, and with sharper consequences. As in other cities, the gap between buildings that work and those that do not is widening. Manhattan just happens to be where that divide is becoming hardest to ignore.

Overheard

Court Approves Bulk Sale of Distressed NYC Portfolio Even as City Eyes Appeal

A federal judge has approved Summit’s roughly $451 million acquisition of a large portfolio of distressed New York City residential buildings that emerged from bankruptcy with thousands of unresolved housing violations. The ruling clears a major hurdle for the buyer, which has been positioned as the stalking-horse bidder and championed by creditors eager to monetize a stalled real estate portfolio. But the chapter isn’t closed. Both the city and tenants have signaled they may appeal, arguing that superior plans or stronger compliance assurances deserve consideration before title transfers and redevelopment begins.

The backdrop is a portfolio long plagued by deferred maintenance, open violations, and a history of code enforcement action. New York city agencies have already indicated they will monitor the post-sale progress closely, insisting that upgrades and remediation of life-safety and habitability issues be prioritized rather than deferred until after closing. Violations in these buildings include fire and electrical safety issues, lack of heat and hot water, mold, and elevator malfunctions—all matters that directly affect both investor returns and tenant well-being. City officials have suggested that Summit’s approval be conditioned on aggressive remediation timelines and transparent reporting, an unusual level of municipal involvement for a bankruptcy sale.

Summit’s approval comes with expectations baked in by both the bankruptcy court and local stakeholders that the new owner will invest capital to bring the properties into compliance and stabilize occupancy. But the threat of an appeal by the city or tenant groups creates near-term uncertainty. If an appeal succeeds, it could delay title transfer and compel a modified bid process or even higher offers from parties with more compelling plans for immediate rehabilitation. Meanwhile, the city’s stated intent to track violation remediation, potentially withhold certain permits or approvals until conditions are met, signals a new paradigm where distressed real estate deals in regulated markets like New York must be paired with enforceable compliance commitments.

The Summit transaction highlights an evolving risk matrix in distressed acquisitions. A court order may clear bankruptcy hurdles, but regulatory and tenant pushback can still shape outcomes and timing. In jurisdictions with aggressive housing codes and active enforcement agencies, buyers may increasingly find that capital for violation remediation and structured post-closing oversight are as critical to closing deals as headline bid amounts. The reaction from New York’s city agencies and tenant advocates could become part of the playbook for other markets grappling with aging inventory, enforcement backlogs, and the challenge of transitioning troubled assets to responsible owners.

Crypto Rent Rewards Test the Limits of Housing Payments

A Texas-based homebuilder has received SEC approval to launch a universal payments token that allows renters to earn cryptocurrency by paying rent and related housing expenses. The concept blends traditional rent payments with a blockchain based rewards system, positioning the token as a form of digital cash back for residents. Regulatory approval gives the idea credibility, but the bigger question is whether renters and property owners actually want crypto embedded into one of the most routine transactions in housing.

There are reasons this could find an audience. Renters already respond to incentives like gift cards, airline miles, and credit card points, and a token that can be redeemed across property services or partner platforms could feel like a modern extension of those loyalty programs. In competitive rental markets, especially those with younger and more tech savvy renters, offering crypto rewards might help differentiate properties without cutting headline rent. For owners and builders, the appeal is less about crypto itself and more about engagement, retention, and data, using payments as a way to keep residents tied into a broader ecosystem.

But there are equally strong reasons adoption could stall. Rent is not discretionary spending, and many renters prioritize simplicity and predictability over experimental rewards. Crypto volatility, tax implications, and general skepticism toward digital assets could limit participation, especially among households already stretched by housing costs. Property managers may also hesitate to add operational complexity to rent collection systems that already work, particularly if resident uptake is uncertain or limited to a niche audience.

Whether this model becomes popular likely depends on how invisible the crypto layer feels to residents. If renters can earn and use rewards without needing to understand wallets, exchanges, or tax reporting, adoption becomes more plausible. If participation requires active crypto management, interest may remain limited. For now, the SEC approval signals that real estate linked digital tokens are moving from theory to experimentation. The market will decide whether rent payments are the right place for crypto to finally find everyday relevance or whether this remains a novelty in an industry that tends to favor stability over innovation.

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.