What’s Happening in Midtown Office Leasing Market – Q1 2025 Update

Showing continued signs of strength, Midtown’s leasing activity reached 4.85 million sq. ft., the highest Q1 total since 2004, but 14% below Q4 2024. While Amazon had the largest lease of the quarter at over 192,000 SF at 237 Park Avenue, it was the financial services sector driving leasing activity for the 18th consecutive quarter, accounting for over one-third of overall activity. The three largest transactions being Santander Bank leasing 191K sq ft at 437 Madison, Mizuho leasing 151K sq ft at 1285 Avenue of the Americas, and Stonepeak Infrastructure Partners leasing 149K sq ft at 30 Hudson Yards.
Transit-centric, high-quality assets in the Midtown core represented 57% of leasing activity. Renewals totaled 1.11 million sq. ft., 13% below the five-year quarterly average. This is actually a good sign of a strong market where tenants are willing to relocate to new office space and not just stay in place often pushing off their real estate decision.
Midtown experienced 1.74 million sq. ft. of positive absorption in Q1, marking the third consecutive quarter with over 1 million sq. ft. of positive absorption. Availability dropped to 15.9%, down 50 bps from the previous quarter and 220 bps from one year ago. This is the lowest availability of the 3 markets (Midtown, Midtown South & Downtown) Available sublease space fell 33% from its peak in February 2023. Average asking rent increased by 1% quarter-over-quarter but remained flat year-over-year, with concession packages at historically high levels indicating net effective rents are still below previous peak levels.
The taking rent index increased 230 bps quarter-over-quarter to 93.4% and was up 170 bps year-over-year. The current taking rent index is still shy of year-end 2019 when the index was 95.3%. This means landlords are slowly becoming less negotiable.
The Midtown development pipeline features four significant office construction projects slated for completion between 2025 and 2026: 270 Park Avenue, 520 Fifth Avenue, 125 W 57th Street, and 665 Fifth Avenue. Collectively, these projects will deliver approximately 2.38 million square feet of new space, with an impressive pre-leasing rate of 84%. The first project is the upcoming JPMorgan Chase headquarters at 270 Park Avenue, which will be among the initial skyscrapers constructed under the new Midtown East rezoning regulations. Next is Rabina Properties’ mixed-use supertall development at 520 Fifth Avenue, offering both residential units and 211,000 sq. ft. of office space. ABR Partners’ project at 125 W 57th Street will primarily serve as an office property, featuring 173,000 sq. ft. of rentable office space. Finally, Rolex’s new headquarters at 665 Fifth Avenue will encompass 126,000 sq. ft. of rentable office space. Additionally, several other planned development sites in the Midtown core include Related’s proposed redevelopment of 625 Madson Avenue (250,000 sq. ft.), RXR’s 175 Park Avenue (2.1 million sq. ft.), Vornado Realty Trust and Rudin Management’s joint venture at 350 Park Avenue (1.5 million sq. ft.), Boston Properties’ project at 343 Madison Avenue (926,000 sq. ft.) and Rudin Management’s development at 415 Madison Avenue (343,000 sq ft)

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Paul Walker
212-984-7117
Paul.Walker@cbre.com