Even the recent economic uncertainty from the Iran war wasn't enough to put much of a dent in leasing in New York's office sector, thanks to the resiliency in the AI space. Signings in the first quarter amounted to nearly nine million square feet, slightly below the 9.1 million square feet posted in the same period a year ago, according to a market report from JLL.
Overall, the brokerage said that tenants focused in the first quarter on scooping up bigger and higher-quality office space. Notable deals included Bank of America expanding to a total of 2.1 million square feet at One Bryant Park and Harvey AI signing for a total of 92,000 square feet at One Madison Avenue.
Also, rents continued to pick up momentum, increasing by 3.5 percent year-over-year to $83.51 per square foot. Class A office in New York averaged $95.49 per square foot.
"Even with the economic uncertainty increasing almost daily, first quarter 2026 NYC office leasing activity was strong, and a substantial commitment by American Express at 2 World Trade illustrates that New York is still the place where large occupiers need/want to be," JLL Vice Chairman Evan Margolin said in a statement provided to GlobeSt.
"AI companies continue to be super active, leasing up a lot more space, and in bigger chunks than before. They are also signing for more space than they need today with plans to grow into the additional space over time. This is a trend that is reminiscent of the dot com boom (and we can all remember how that ended), but this time they're clearly focused on top-tier buildings in prime locations, which is pushing the class A market to new highs."
JLL reported that AI platform Nscale Global Holdings set a new New York rent record in the first quarter, with its signing at $320 per square foot. That comes before Soloviev Group reported this month that it signed a family office to a $327.50 per square foot rent at 9 West 57th Street in Midtown, which would be the new all-time high.
Meanwhile, vacancy dropped by 220 basis points to 13.5 percent, which JLL admitted that tenants were forced to concede on the quality of their location. Concessions, overall, are stable, according to JLL.
Still, the brokerage expects that New York occupiers will remain picky about the locations they choose and continue to prioritize building quality and location, with landlords focusing more on "asset differentiation" and getting leases inked in general.
Overall, it remains to be seen if this level of leasing can be sustained throughout 2026. After all, the first quarter did just include one month or so of the war in the Middle East and it remains to be seen if escalation happens. Plus, some debate is being had over whether the four boroughs outside of Manhattan are losing their desirability.
"Many occupiers are starting to have more conversations about growth in NYC vs growth in a location outside of Manhattan where rents are lower, opportunities are more plentiful and cost of living is lower, which appeals to their workforce," Margolin said.
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