Owners of the country’s most expensive offices are luring occupiers with massive incentives, with the average cash payments given to Manhattan tenants now double what it was five years ago.

In 2021, the average cash payments in the borough given to tenants were $154 per SF, The Wall Street Journal reported, citing CBRE data. That is up from an average of $76 in 2016. The incentives, which come in the form of landlords paying build-out costs and tenants' moving expenses, are pushing rents down — even if it doesn't show up in the official figures.

“Face rents have not changed since the pandemic, but that’s not the story,” Savills Vice Chairman Jeffrey Peck told the WSJ. “The story is the fact that landlords are now receiving 20% less than what they had been receiving prior to the pandemic.”

While official face rents have gone up by nearly 2%, the money landlords are taking home is actually down by more than 7%, per CBRE.

The dynamic is critical to the city's run of recent top-dollar lease deals; despite the damage the pandemic has done to the leasing environment, there were six leases with starting rents of $200 per SF or more last year, according to JLL. The 164 leases signed at $100-plus starting rents in 2021 were a record for the city.

But the math behind many blockbuster deals shows landlords are giving up a lot to get the deals over the line. Facebook’s 730K SF lease on Manhattan’s West Side at the Farley Building saw landlord Vornado paying $150M in construction costs, one of the biggest incentives ever recorded, the WSJ reported. RXR Realty is paying $30M in construction work to secure Roku’s 240K SF lease at 5 Times Square, as well as providing as much as two years in free rent.

These offerings are set against a backdrop of increasing anxiety about how office occupiers will behave in the long term. In Manhattan, workers’ return to the office has been sluggish, and it was set back further in the omicron wave.