Navigating NYC’s Office Market: Rent Trends and Vacancy Rates

Hover over the map below to explore the average asking rents and vacancy rates across NYC’s office submarkets, based on Costar’s latest research. One interesting trend you’ll notice is that the typical supply-and-demand relationship in the office market isn’t holding up as expected. Normally, as vacancy rates rise (increased supply), rental rates fall. However, that’s not what we’re seeing right now in New York City.

Flight to Quality: A Key Driver

One major reason for this anomaly is the pronounced “flight to quality” among tenants. If you focus on the top 50 office buildings in NYC (excluding newly completed buildings still in lease-up), the vacancy rate is just shy of 10%, not far from the pre-COVID figure of 9%. Meanwhile, the average asking rent for these premium spaces is holding steady at around $114 per square foot—remarkably close to the pre-pandemic average of $114.86 per square foot.

In stark contrast, Class B and C office buildings are facing higher vacancy rates—20.7%, up 2.4% from the previous quarter—and a significantly lower average asking rent of $56.03 per square foot. Tenants are clearly willing to pay more for high-quality, well-located offices, leaving older, less desirable properties with rising vacancies.

On-the-Ground Insights: A Market on the Move

Leasing activity often serves as an early indicator of broader economic trends. Long before official data hits the headlines, commercial real estate brokers observe shifts in demand that signal growth or contraction. Based on the recent surge in activity we’re seeing, it appears the office market is poised for further rent growth and declining vacancies.

In fact, of the last 11 lease transactions we’ve been involved in over the past three months, nearly every deal had 1–3 competing tenants submitting offers, often within days of the space hitting the market. While this competition has been common in prime locations like the Plaza District and Grand Central, it’s now spreading to Midtown South and even Downtown—a clear sign of strengthening demand across the city.

Rezoning and Future Supply

Looking ahead, New York City’s upcoming rezoning initiatives, including the City of Yes and the Office Adaptive Reuse Task Force, are set to reshape the office supply landscape. These measures will likely reduce the availability of office space by encouraging conversions and modernizations, particularly of older properties. This, in turn, will support higher rental rates and bring much-needed upgrades to aging office stock.