John Maher said that even though there is a plethora of office space on the market, not enough of it is truly quality.
Those in the law, financial and entertainment spheres will be demanding more high-quality office space, of which there is not enough, he stated.
Currently, there is only 1.1 million square feet of office space available that is on floors 25 or higher in New York. This dearth is causing higher rents in those high-end office spaces that do exist, Maher said.
“That ultimately has to drive new construction,” he added.
“For anybody that is worried about a large volume of construction being filled, we are not. We think New York City needs it, and that would be ultimately good news for the city to capture job growth.”
Deals on high-end office space can influence the market all out of proportion to their size, CBRE Executive Vice President Paul Myers said.
He stated: “It’s fascinating how these deals drive psychology,” said EVP Paul Myers. “People want to know about the deals at the top end of the range, even though they often represent a small proportion of the deals in New York City.”
In the first quarter of this year, rents in midtown climbed by about $2 per square foot to $58.14. In Midtown South, approximately 550,000 square feet of office space was leased, which resulted in 160,000 square feet of positive absorption. The average rent for this climbed by 15 cents to $42.72 per square foot.
Editor’s notes: In 2022, New York’s Midtown district reached $220 gross per square foot per year (rent plus additional occupancy costs), making it the 2nd most expensive district in the world to rent office space.
Premium rent in Midtown South reached $132 per square foot, making it the 7th most expensive district in the world in which to rent office space.
The best-in-class office space to rent in Downtown Manhattan reached $102 per square foot, making it the 18th most expensive location in the world to rent an office.
In Q1 of 2023, New York had a total office space inventory of 469,575,735 square feet with a vacancy rate of 16.1 per cent. At the time, there was 13,628,890 square feet of new office space under construction.
In Q1 2026, New York City’s overall office vacancy rate stood at 14.6 per cent.
In the same period, the overall Manhattan office vacancy rate was 13.1 per cent whilst Midtown Manhattan’s prime vacancy rate was just 2.9 per cent.
This was the case in the majority of major office markets globally, caused by what has been termed a ‘flight to quality’ where occupiers are seeking trophy office space with the best specifications, including good environmental, social and governance (ESG) credentials, in the prime locations, combined with the challenges developers have been facing for several years, reducing their ability to meet demand, leading to very low availbility of the best office space.
This supply and demand imbalance was also causing upward pressure on office rents, and in Q4 2025, Midtown Manhattan was found to be the third most expensive location globally with a net effective cost to the occupier of $200.30, whereby the net effective cost takes into account average landlord incentives, such as cash allowances, and rent-free periods.