Manhattan’s office market is gaining traction in 2025, with leasing activity hitting its strongest post-pandemic levels — yet the availability rate remains stubbornly high, revealing the complexities of recovery in a bifurcated market.

According to Savills, 21.1 million square feet of space was leased in the first half of 2025, the best showing since 2014. Major transactions, like Paul, Weiss expanding to nearly 850K SF at 1345 Avenue of the Americas and Verizon taking 203K SF at Penn 2, have contributed to the leasing surge. Analysts say full-year leasing could even outpace 2019’s pre-COVID totals.

However, this momentum hasn't significantly dented overall availability, which still hovers at 14.7%, down from 15.4% in early 2025 — but still well above the 11.7% rate recorded in 2019. The core issue? Leasing activity is highly concentrated in Class A+ and trophy assets, while Class B buildings struggle to attract tenants.

Trophy assets — roughly the top 15% of the market — have returned to pre-pandemic strength, now sitting at a 10% availability rate. In contrast, Class B space remains elevated, with availability at 16.8%, according to JLL.

Location further complicates the picture. Hudson Yards is thriving with an 8.8% availability rate, while Chelsea sits at a staggering 30.2%. Much of Chelsea’s inventory is Class B, and its challenging commute compared to Hudson Yards may be keeping tenants away, said Savills’ Matthew Schreck.

Conversions are helping, with over 15 million square feet of office space in NYC now converted or being converted to residential use. According to NYC Comptroller Brad Lander, this could absorb one-third of post-2019 occupancy losses in the lower-tier market and deliver nearly 17,400 apartments.

Still, recovery will take time — two to three years, estimates CoStar’s Victor Rodriguez. Many older buildings still require significant upgrades, but financing remains elusive in the current capital environment, slowing redevelopment and construction starts.

Even so, new construction is underway in prime areas, with many projects pre-leased before completion:

• Extell’s 29-story tower at 570 Fifth Avenue, anchored by Ikea, is nearing a lease with Simpson Thacher & Bartlett for 700K SF.

• 70 Hudson Yards, a 60-story tower by Related and Oxford, secured 800K SF from Deloitte.

• 343 Madison Avenue by BXP has a letter of intent from a major financial institution.

Rodriguez noted that even as new inventory comes online, demand is outpacing supply in high-end segments, meaning new space gets filled quickly and has little effect on the availability rate. If current trends continue, he predicts the rate could fall below 13% by next year.

JLL’s Andrew Lim said this “musical chairs” effect — as anchor tenants move into new builds — will open up space for smaller tenants, driving further positive momentum in the market.

One potential wild card is the outcome of the upcoming NYC mayoral election, which could influence how the business community engages with City Hall. Democratic nominee Zohran Mamdani has drawn mixed reactions from the city’s largest landlords. Still, Rodriguez pointed out that leasing thrived under previous administrations viewed as business-unfriendly, suggesting that the market often finds its own rhythm regardless of politics.

Overall, Manhattan’s office market is undeniably recovering, but the return to pre-pandemic health is uneven and selective, driven by high-end spaces and hindered by outdated stock in need of reinvention.

essory dwelling unit (ADU) startup Samara has secured $34 million in Series B fund

The Manhattan office market is showing real momentum in 2025, though challenges remain beneath the surface.

Leasing Activity Hits a Decade High
In the first half of 2025, tenants signed more than 21 million square feet of office leases — the strongest first-half performance since 2014. Much of this demand came from law firms and large corporations securing premium space in high-end buildings.

Availability Rates Trending Down
Overall availability has eased to about 14.7%, the lowest level since early 2021. While that’s a marked improvement, the market still hasn’t returned to its pre-pandemic norm of roughly 11.7%.

Trophy vs. Class B: A Market Divide
Top-tier, “trophy” properties are thriving, with availability around 10%, effectively back to pre-pandemic conditions. By contrast, Class B buildings remain under strain, carrying vacancy rates closer to 17%. The gap is also stark between neighborhoods: Hudson Yards boasts sub-9% availability, while nearby Chelsea struggles with more than 30%.

Conversions Help Ease Pressure
A growing wave of office-to-residential conversions — totaling over 15 million square feet in New York City — is helping reduce supply and balance the market.

New Construction Slow, but Pre-Leased
High financing costs and construction challenges mean fewer new projects are breaking ground. However, the projects that do move forward often secure major tenants before completion, such as new towers at Fifth Avenue and Hudson Yards.

The Road Ahead
Experts predict availability could fall below 13% within the next year if current leasing momentum holds. Still, landlords of older buildings face pressure to invest in upgrades, while tighter lending conditions and political uncertainty continue to shape the outlook.

ing led by Thrive Capital, marking a significant milestone in the company’s rapid growth. Originally incubated within Airbnb before spinning out in 2022, Samara is now positioning itself as a key player in addressing California’s housing shortage by offering prefabricated, high-quality backyard homes — and is now signaling expansion into the multifamily market.

The fresh capital infusion comes on the heels of major momentum: Samara has surpassed $100 million in total project value, opened a second manufacturing facility adding 200,000 square feet to its production footprint, and activated projects in 45 cities across California. With this expanded capacity, the company is ramping up production to meet growing demand fueled by supportive state legislation.

“Propelled by state legislation that makes it easier to add new housing units, we’re scaling our operations to deliver high-quality solutions for not just homeowners, but also multifamily property owners – an increasingly important audience for us,” said Samara CEO Mike McNamara.

Samara’s roots in Airbnb have helped it maintain a design-forward, scalable approach to ADU construction, focusing on sustainability, simplicity, and speed. The company’s announcement also follows a social impact partnership with Steadfast LA to donate 80 to 100 ADUs to wildfire victims in the Los Angeles area — further reinforcing its mission-driven ethos.

Samara’s trajectory coincides with sweeping policy shifts in California aimed at accelerating housing development. Governor Gavin Newsom has signed numerous bills to ease ADU development in recent years, including a mandate for cities to allow ADUs by right. Most recently, state lawmakers amended the California Environmental Quality Act (CEQA) to exempt infill housing projects from environmental review, removing one of the largest barriers to construction.

The state’s streamlined regulatory environment is drawing capital and innovation into the space. In addition to Samara’s Series B, Reframe Systems, another prefab housing startup, raised $20 million in Series A funding last month.

With this latest round led by Thrive Capital and continued support from Airbnb, Samara appears well-positioned to scale as both a housing solution provider and a potential disruptor in multifamily development — tapping into a broader range of property owners looking to adapt to shifting housing needs.