While The NYC Office Market May Look Challenged, A Cushman & Wakefield Report Tells A Different Story

While the Midtown Manhattan office availability rate remains above 23%, Cushman & Wakefield Vice Chair and Head of Alternative Investment Advisory Michael Movshovich said that number doesn't tell the whole story in a highly segmented market.
“The statistics may show a challenged Midtown office market with extensive availability. However, a significant number of buildings cannot transact at current market rents without first being recapitalized,” Movshovich said. “The result is an elevated availability rate when looking at the market overall, but a much lower 12.3% within the most active segment of the market, made up of the top 20% of buildings.”
Movshovich and his team specialize in advising investment management firms on their space strategies. Clients include hedge funds, private equity firms, private credit groups and boutique investment banks.
He said a critical part of his job is to ensure clients develop accurate insights into the market beyond basic data so they can truly understand their options and the competitive landscape. The team takes a highly detailed approach to the data, showing how the premier building subset's performance is distinguished from the broader market. This provides clients with a snapshot of the market segment most relevant to them.
The team also publishes an annual report summarizing the state of this market subset along with leasing data specific to the investment management industry.
Bisnow spoke with Movshovich about the findings in the 2024 report, the evolution of market segmentation in Manhattan and where he sees the office market heading in 2025.
Bisnow: How has market segmentation changed in Manhattan in recent years, particularly since the pandemic?
Movshovich: When I started my career, there was much more uniformity to what investment managers were looking for. Interest was concentrated around Park Avenue and the Plaza District. After 2009, many groups changed their thinking on how they wanted their space and building to represent them. There was a widespread desire by many to be more understated. Leading up to the pandemic, building quality, especially new construction, began to hold an elevated level of importance, driving more flexibility on location. It became product over location for the first time.
Since the pandemic, the desire for top-quality and new-construction buildings has remained strong. However, preferences have become much more divergent. For some, building quality and new construction remain the primary objective. Others have reverted to prioritizing location and commute convenience, meaning they are often unable to find a new-construction alternative. The number of managers now seeking an office outside of traditional Midtown in neighborhoods such as Flatiron, Meatpacking, Union Square and SoHo is higher than at any point in my career.
Location is also not a one-size-fits-all. Cients are often surprised when we analyze their employees’ commutes and discover that areas they may have previously not considered due to perceived inconvenient commutes work well for most of their team.
Bisnow: How do you select which buildings are included in your premier building data and reports?
Movshovich: We look at the 260M SF Midtown office market and scale it down to the approximately 60M SF that is most relevant to our clients. Initially, we selected the buildings based heavily on our observations of client preferences. Now we are much more data-driven.
We look at which buildings consistently make it into space surveys, which ones our clients choose to tour and which ones are selected on the shortlist to receive a proposal. We show both primary and secondary premier buildings, and this list is always evolving. Buildings that have not kept up with renovations, amenities and quality of landlord finishes will shift to secondary — or potentially be removed from the list. Others are added to the list following extensive capital improvement plans, which many owners undertake to stay competitive.

Bisnow: What key market trends does the report show?
Movshovich: We’ve been tracking everything happening in these buildings for a long time. One area of particular interest is growth trends within the investor industry. We look at transactions over 10K SF that are for terms longer than five years, highlighting how much of the newly leased square footage is incremental growth space relative to the group’s previous office. In 2024, the average investment manager transaction included a square footage increase of over 60% across the top 60 transactions. This is the third year in a row where this number exceeded 50%.
The considerable expansion in the industry is driving more relocations. In 2024, two-thirds of the transactions signed within these buildings were relocations. Companies are looking for larger spaces and seeking to rebuild to new standards. Doing this within an existing space can be much more challenging.
Bisnow: Did any neighborhoods or buildings stand out this year?
Movshovich: As a submarket, Park Avenue really stood out with less than 10% availability and continued demand from new companies entering the market. Several Park Avenue buildings have successfully increased pricing with each transaction in a very short time frame. Location alone is not enough. Top-performing buildings on Park Avenue have had considerable capital investment in amenities and other upgrades.
In addition to Park Avenue, Hudson Yards has remained extremely active. Of the top five buildings by leasing volume, three are located in Hudson Yards.
Bisnow: What are your expectations heading into 2025 from both a supply and demand perspective?
Movshovich: We expect the demand to remain strong. While we have been incredibly active this year, we still have many clients who have been in the market for a long time and have not made commitments. Many of them expect to make decisions in 2025, and we are simultaneously entering the market with multiple new requirements.
Tightening supply is coupled with little to no additional inventory. Other than two boutique new-construction buildings, there is nothing new delivering in this submarket in 2025 or in the pipeline with a definitive time frame. We expect several potential developments to secure anchor tenant leases in 2025. Potential projects on Park Avenue, Madison Avenue and in Hudson Yards are in active discussions that could lead to new projects that would deliver in several years.
Heading into 2025, we see supply and demand within premier buildings shifting from balanced to a market where tenants are feeling supply constraints and more competition for space. With $200-per-SF rents no longer an anomaly, we would not be surprised to see rents at the very best buildings approaching $300.
As the investment sales market continues to thaw, more buildings are being recapitalized or sold. Several projects have the potential to be redeveloped. However, none of these would become available until late 2026 or beyond.
For our clients, this means that decisions may need to be made more quickly or key criteria may need to be adjusted. Overall, the market is more dynamic, with more companies relocating, opening up new opportunities and unexpected availabilities. It’s more important than ever to do the necessary prep work and also become aware of these opportunities early in order to take advantage.
This article was produced in collaboration between Cushman & Wakefield and Studio B. Bisnow news staff was not involved in the production of this content.
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