Manhattan Downtown Leasing Market: What to Know
Going into 2026

Leasing activity in lower Manhattan (FiDi) has entered 2026 with a sense of momentum.” After
a dramatic surge in 2025, the market is no longer defined by pandemic-era hesitation.

Leasing Activity & Historical Context

In 2025, Downtown recorded 4.8 million sq. ft. of leasing activity—the strongest performance
since 2019. This represents a massive recovery from the 2.2 million sq. ft. low seen in 2024.

1.  Year | Volume | Status
2. 2025 | 4.8 mm | 6-Year High
3.  2024 | 2.2 mm | Record Low
4.  2023 | 2.8 mm | Subdued
5. 2022 | 3.1 mm | Recovery
6. 2021 | 2.6 mm | Pandemic Impact
7. 2020 | 2.3 mm | Pandemic Impact
8. 2019 | 5.5 mm | Pre-Covid Benchmark

The “Conversion Effect” on Availability

Availability rates, which peaked at 23% in 2023, fell to 18.8% at the start of 2026. While demand is rising, the “hidden” driver of this decline is the removal of obsolete office stock.

• Residential Pivot: Over 5 million sq. ft. of older office space has been pulled for
  residential conversion.
• New Pipeline: Recent announcements for 40 Exchange Place, 10 William Street, and 17 Battery Place indicate that this trend is continuing.

Key Market Drivers & Sector Trends

1. The Return of the Large Block

2025 saw a resurgence of “whale” deals (leases over 50,000 sq. ft.), which accounted for 44% of
total square footage. Downtown is increasingly benefiting from the scarcity of large, contiguous
blocks in Midtown and Midtown South.

2. Sector Breakdown

• Financial Services (33%): Remained the anchor of Downtown demand. Notable Q4 deals included Moody’s (458,000 sq. ft. at 200 Liberty) and Arch Insurance (74,000 sq. ft. at 199 Water).
• Technology (17%): Significant growth from AI and Fintech, led by Stripe’s 139,000 sq.
  ft. expansion at 28 Liberty and Scale AI’s 79,000 sq. ft. sublet at 1 WTC.
• Legal (8%): Steady direct leasing activity in modernized Class A buildings.

3. Rents

• Asking Rents: Averaged $58.40 per sq. ft. at year-end—up 2% year-over-year but still
  9% below the 2020 peak.

Outlook for 2026

As we move further into 2026, expect the Downtown market to tighten. With Midtown Class A
vacancy reaching historic lows, large-block tenants will likely view Downtown’s high-amenity
towers (like 28 Liberty and the World Trade Center) as the most viable “value-play” in
Manhattan. Also, as prices rise in Midtown and Midtown South, the $30 per sq ft discount that
Downtown offers will become more attractive as employees have become more accustomed to work from the office.

If you require additional information or have a requirement, please feel free to contact
me.

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