Decoding NYC Office Rent: Why the Numbers Don’t Tell the Whole Story

Many people assume the New York City office rental market has mirrored the sharp downturns seen during the dot-com bubble and the financial crisis. However, a closer look reveals a more nuanced picture. While overall asking rents haven’t plummeted as drastically, there’s a significant shift happening beneath the surface.

Average Asking Rents

• Midtown:

  • 2019: $86.35

  • 2025: $82.13

  • Decline: 5%

• Midtown South:

  • 2019: $84.67

  • 2025: $84.01

  • Decline: 1%

• Downtown:

  • 2019: $63.10

  • 2025: $57.11

  • Decline: 10%
    At first glance, these figures suggest a relatively stable market. But here’s why those numbers don’t tell the whole story:

1. The Weighted Average Effect

• The statistics represent a weighted average, meaning larger, typically Class A buildings have a greater impact.

• These Class A buildings, often newer and more desirable, have maintained their value better than older Class B and C buildings.

• The flight to quality post-COVID has kept Class A rents relatively stable, masking the significant price drops in B and C buildings. These lower-cost, smaller buildings on side streets have experienced considerable price reductions, which are not fully reflected in the overall averages.
  ➡️ For insights into how Class A buildings outperform others, explore The Strength of Manhattan’s “Better Buildings” in the Midtown Core.

2. Increased Negotiability

• The “taking rent index” (the percentage difference between asking and actual rents) has increased from 5% in 2019 to 7% today.

• This indicates landlords are more willing to negotiate, offering discounts on top of already adjusted asking prices.

• Especially within B and C commodity-type buildings, there is a lot of room for negotiation. Again, this is not reflected in the average asking rent.
  ➡️ For strategies tenants can use to negotiate favorable leases, check out Blend and Extend.

3. The Telling Tale of Net Effective Rent (NER)

• The most revealing metric is the Net Effective Rent (NER), which represents the landlord’s actual income after all deal costs.

• NER has declined by a substantial 28% since 2019.

• This decline is primarily due to increased concessions, including higher tenant improvement allowances and more free rent.

• Landlords are investing in higher-quality spaces while facing rising construction costs, leading to a significant decrease in their net income. For example, if a landlord netted $50 per deal in 2019, they might only be netting $36 in 2025.
  ➡️ Learn more about how concessions impact effective rents in Concessions Take Center Stage in Manhattan Office Leasing.

While average asking rents suggest a mild downturn, the reality is that landlords are making significantly less money due to increased concessions and the disparity between Class A and B/C building performance.
➡️ For detailed analysis of NYC office market trends and metrics like NER, read Deal Economics in a NYC Lease: What You Need to Know.

If you’d like a more detailed market analysis or specific statistics, please feel free to contact me

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