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

Midtown South’s 2024 second half of the year resurgence carried over into 2025, as nearly every facet of the market began the year with strong performance. Leasing activity (which excludes renewals) led the way, amassing its highest total to start a year in more than a decade, at 1.61 million sq. ft., even absent the large block deals which typically boost the stats. To put this in context 1.61 mm sq ft annualized would be 6.44 mm sq ft. 2019 was at 7 mm sq ft, 2018 was at 6.7 mm sq ft and 2016 was at 5 mm sq ft. So, if leasing keeps up, 2025 would be back to pre-covid levels.
The boost in activity was propelled in part by a rebounding tech sector with significant leasing deals by Figma, IBM, Intuit, Plaid and Buzzfeed. Renewal activity also had a solid quarter reaching 477,000 sq. ft., its second-best total since Q3 2022, due largely to Horizon Media’s mega-sized 360,000 SF renewal at 75 Varick Street.
The combination of strong leasing, moderate new supply added, and the sale of 2 Park Avenue for partial owner occupancy by Haddad Brands produced nearly 700,000 sq. ft. of positive new absorption in Q1 2025 – a quarterly level not seen in almost six years. This pulled the availability rate down 80 bps from the prior quarter to 21.9%, yet available space remains elevated in the market. Following little upward movement throughout 2024, the average asking rent increased Q1 2025, rising 1% from a quarter ago to $85.01 per sq. ft
Midtown South’s taking rent index saw a 300 bp quarter-over-quarter increase in Q1 2025 to 93.3%. It has now improved in three of the past four quarters and is up from 87.8% at year-end 2023. Still, it remains below its recent high of 97.8% reached in mid-2022.
Midtown South’s new construction pipeline remains thin, with only two boutique projects on the horizon: the 49,000 sq. ft. 1 St. Mark’s Place in Union Square and 47,000 sq. ft. 500 West 18th Street (One High Line), a mixed-use development in Chelsea. Both are set to deliver in Q2 2025.

For a more detailed market overview or questions on comps or any specific properties please feel free to contact me to discuss.

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