A striking divide has emerged in the U.S. office leasing market, with New York City’s trophy office towers pulling far ahead of their counterparts across the country. As companies across the nation slowly return to the office, the appetite for prime space in Manhattan has reached a fever pitch, setting the city apart in a sector still grappling with the aftershocks of the pandemic.
According to Victor Rodriguez, senior director of analytics for CoStar, the numbers tell a dramatic story. Since early 2023, the availability rate in New York’s trophy buildings—defined as five-star, best-in-class office towers—has plummeted from 17% to just 10.7%. “That’s a major drop-off in a relatively short period of time,” Rodriguez told GlobeSt, emphasizing the magnitude of the shift. In stark contrast, trophy office availability in the rest of the U.S. has barely budged, declining from 23.9% to 23.6% over the same period, a change of just 30 basis points.
This divergence is being driven by a surge in demand unique to New York. Since the start of 2025 alone, nearly 60 new leases totaling almost two million square feet have been signed in the city’s trophy buildings. By comparison, all other U.S. markets combined have seen about nine million square feet leased in the same category. “We’re seeing tons and tons of new leasing take place over the past 18 months or so,” Rodriguez noted, pointing to recent deals like Deloitte’s lease at 70 Hudson Yards—a building that is still under construction. “People are leasing space that’s not even built here… because so much has shrunk in a short period of time,” he explained. The sense of urgency is palpable, with tenants scrambling to secure prime locations before they disappear from the market.
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Rodriguez attributes this momentum to several factors. First, New York’s enduring appeal as a business hub is underscored by recent census data showing the city’s population grew by 87,000 last year, with the broader metropolitan area adding over 100,000 residents. “People want to be in New York City,” he said. This population growth is mirrored by companies’ willingness to return to the office, often for three, four, or even five days a week—a trend not seen as strongly elsewhere in the country. The comfort of knowing that others are making similar commitments has made it easier for firms to sign long-term, high-value leases. “Sticker shock really isn’t there,” Rodriguez observed. “People are paying $100, $150, $200, $250-plus, in some cases, per square foot, to lease the space in some of these trophy buildings.” The issue is not price, but availability.
The “flight to quality” is not unique to New York, but the pace is unmatched. While other gateway markets like San Francisco are also seeing improvement, New York is “by far exceeding the recovery in San Francisco, for sure,” Rodriguez said. He does see signs that the rest of the country is beginning to follow New York’s lead. Over the past year, trophy office availability in U.S. markets outside of the city has declined by 150 basis points. Yet even with this recent momentum, New York’s decline—430 basis points in the same period—remains far steeper.
Looking ahead, Rodriguez expects the availability of these asset types to continue declining nationwide, though he cautions that the pace in New York will inevitably slow as the market tightens further. “There can become a point where you can’t just decline at such a pace, because there’s just not much space left anymore,” he said. While other markets may eventually catch up in trend, Rodriguez does not anticipate the rest of the country reaching The Big Apple's availability rate anytime soon. “New York is a place where companies want to expand in, and the rest of the U.S. just doesn’t have as strong demand drivers.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
