September Update – Office Market Momentum Continues – New Office Development Asking Rents $200 – $300 Plus Per Square Foot. Are $400 rents around the corner?
Armano Real Estate has had one of its best quarters on record. The summer weather was hot and we sizzled. Among our recent notable deal closings are the relocation of a Norwegian global investment bank to 499 Park Avenue, and the renewals of a law firm at 39 Broadway and a high-end gallery at 210 Eleventh Avenue.
In each case, we advocated aggressively and achieved below market deals. In the case of the Norwegian Investment Bank, the tenant landed in a beautiful high-end space at incredible terms in a hot high-end Park Avenue market. More information can be found in the case study here.
Manhattan Report
Manhattan office fundamentals continued to strengthen through July 2026. Availability declined materially across the market, leasing volume remained above historical norms, and landlords of trophy and well-located Class A assets gained pricing power. However, the improvement remains uneven: best-in-class Midtown and new-construction space is increasingly scarce, while older Class B/C inventory still offers tenants meaningful value and negotiating leverage.
- Manhattan availability is 14.0% at July month-end, down from 14.4% at Q2 and 17.2% a year earlier, with an
- average asking rent of approximately $80.20/SF.
Manhattan Market Statistics
| Market | Avg. Asking Rent | Availability | Sublease Availability | Sublease Ask |
| Manhattan | $80.20/SF | 14.0% | 2.4% | $58.74/SF |
| Midtown | $85.77/SF | 12.3% | 2.1% | $60.66/SF |
| Midtown South | $86.34/SF | 16.8% | 2.3% | $70.97/SF |
| Downtown | $61.91/SF | 16.3% | 3.3% | $47.46/SF |
Class A, B and C Market View
| Segment | Indicative Rent / Metric | Current Market Read |
| Class A / Trophy | $84.79/SF Manhattan Class A Q2 average; Midtown South Class A $104.50/SF | Strongest landlord leverage. Premium new or renovated space in Park Ave., Grand Central, Plaza and Rockefeller Center often commands well above market averages. |
| Class B | Generally below Class A; highly submarket/building specific | Improving demand as tenants trade down from scarce Class A. Best renovated Class B buildings are benefiting from the flight-to-quality spillover. |
| Class C / Commodity | Often materially below market average | Still tenant-favorable in many buildings. Value exists, but tenants should scrutinize ownership capitalization, building systems, amenities and conversion risk. |
New Development and New-Construction Pipeline
The development pipeline is unusually constrained relative to Manhattan’s existing office inventory. For tenants, this means the limited number of new-generation buildings can command rents far above traditional submarket averages. Asking rents are not publicly disclosed for many projects; where no verified public ask exists, the table below says so rather than presenting an estimate as a quoted rent.
| Development | Approx. Office SF | Timing / Status | Public Asking Rent / Pricing |
| 350 Park Avenue | ~1.85M SF | Development launched; future Park Avenue trophy tower | $350/SF starting ask confirmed by Vornado management in Aug. 2026. |
| 343 Madison Avenue | ~930,000 SF | Under construction; late 2029 delivery; ~56% pre-leased | Not publicly disclosed. Starr and McDermott Will & Schulte leases establish strong pre-leasing momentum. |
| 570 Fifth Avenue | ~1.1M SF planned | Under construction; expected 2028 delivery | Not publicly disclosed. Simpson Thacher finalized ~916,000 SF lease. |
| 125 West 57th Street | ~170,000+ office SF | Recently completed; more than 75% leased by late Aug. 2026 | Not publicly disclosed. Plaza District Class A Q2 average cited at ~$97.23/SF, but new construction likely commands a premium. |
| 520 Fifth Avenue | ~400,000 office SF within mixed-use tower | New mixed-use office/residential development | Public current asking-rent schedule not reliably disclosed in major market sources. |
| 175 Park Avenue | ~2M+ office SF planned | Long-term Grand Central development pipeline | Not yet broadly marketed; no verified public asking rent. |
Selected Development Notes
350 Park Avenue is the clearest evidence of the economics required for next-generation Midtown construction. In August 2026, Vornado Chairman Steven Roth confirmed an expected starting asking rent of approximately $350/SF, citing scarcity of new supply, construction costs and financing costs.
343 Madison Avenue is BXP’s 46-story, 930,000-SF tower with direct access to Grand Central Madison. BXP expects delivery in late 2029. Starr expanded to approximately 320,000 SF, and McDermott Will & Schulte signed approximately 150,000 SF, bringing the project to roughly 56% pre-leased by June 2026.
570 Fifth Avenue has emerged as one of the largest future Midtown deliveries. Simpson Thacher finalized a roughly 916,000-SF lease in May 2026, with delivery expected in 2028. The transaction underscores how major tenants are committing years in advance to secure high-quality future inventory.
125 West 57th Street is a useful example of current demand for boutique new construction. By late August 2026, the building was reported at more than 75% leased, with recent commitments from Aegon/Transamerica, Anchorage Capital and Eldridge Industries. Deal-specific asking rents were not publicly disclosed.
Tenant Strategy for the Balance of 2026/2027
- Start earlier. Tenants seeking trophy or large-block Class A space should begin evaluating options well before traditional 12-18 month windows where feasible.
- Separate headline rent from net economics. Concessions remain meaningful in many buildings, but are becoming less generous in the strongest Midtown assets.
- Use Class B as a strategic alternative. Renovated Class B buildings with strong ownership, amenities and transit access can offer compelling value as Class A supply tightens.
- Evaluate conversion and ownership risk. Older buildings may offer low rents but face capital, occupancy or residential-conversion uncertainty.
- Protect expansion flexibility. In a tightening market, rights of first offer, expansion options and termination/extension flexibility become more valuable.
Outlook
For the balance of 2026, the base case is continued gradual compression in Manhattan availability and further rent growth at the top of the market. CBRE’s August midyear outlook specifically expects tougher negotiations in Park Avenue, Grand Central, the Plaza District, Sixth Avenue/Rockefeller Center and Fifth/Madison, while still identifying value in commodity space. The market is therefore best viewed as increasingly bifurcated: landlord-favorable at the trophy end, but still negotiable for older and less differentiated space.
