NEW YORK CITY—Fueled by strong leasing demand that produced more than 9.4 million square feet of office leasing activity during the first three months of 2014, New York City's office vacancy rate fell to 10.5% at the end of the first quarter of this year.

Cushman & Wakefield reports that the first quarter's leasing volume was the highest ever recorded by the brokerage firm. “In the first three months of the year, we have had very strong leasing activity across all three submarkets resulting in very strong positive overall net absorption,” says Ron Lo Russo, president, New York Tri-State Region. “In fact, the absorption in the first quarter was the highest quarterly total we have seen in the past 10 years.”

A total of 38 leases of 50,000 square feet and larger, including new leases and renewals, were completed in the first quarter—the largest total number of deals completed in a first quarter in more than a decade.

Another heady statistic for the first quarter was that total absorption in Manhattan totaled 3.6 million square feet, which was the highest year-to-date quarterly absorption level since the fourth quarter of 2011. Leasing activity in the first quarter of this year soared more than 67% as compared to the same period a year ago, C&W says.

The overall average asking rent in Manhattan increased 7.3% year-over-year to $63.96 per-square-foot from $59.60 per-square-foot. The Manhattan Class-A direct asking rent totaled $69.80 per-square-foot, which calculated out to an increase of 3.8% as compared to the first quarter of 2013.