For at least the third time this year, there is a new record holder for the most expensive office lease in New York City history.

Castle Hook Partners agreed to pay $375 per SF for the two-story penthouse atop Related Cos.' upcoming trophy office tower at 625 Madison Ave., according to JLL. The hedge fund is one of 11 companies that have agreed to pay more than $300 per SF in rent for Manhattan office space so far in 2026, a nearly unprecedented threshold until this year.

If not for Castle Hook, NYC's rent record still would have fallen last month. Sentinel Capital Partners paid $340 per SF, according to JLL, to expand its office at SL Green's One Vanderbilt by 7K SF on the tower's 54th floor. 

One Vanderbilt, a 1,401-foot supertall connected to Grand Central Terminal that opened in 2020, briefly held the record for priciest NYC lease in March when Nvidia-backed Nscale paid $320 per SF for 7,204 SF, also on the 54th floor. A few days later, Soloviev Group announced a $327.50-per-SF lease at 9 W. 57th St.

Castle Hook plans to move from BXP's General Motors Building at 767 Fifth Ave. when 625 Madison delivers in 2029 and is expected to pay more than $21M annually in rent, the Financial Times reported.

Castle Hook and Related didn't respond to Bisnow's requests for comment.

The record-shattering leases come as the amount of available office space in Manhattan, particularly at the high end of the market, has functionally disappeared. Trophy vacancy was 4.9% at the end of the third quarter, according to JLL.

“It’s a scarcity issue,” JLL Vice Chairman Evan Margolin said. “Tenants are willing to pay up to be in the best buildings.”

Asking rents at Class-A buildings hit an all-time high in Q3 at $85.45 per SF, according to Colliers, but even that doesn't tell the whole story, Margolin said.

Developments like Related's 625 Madison and 70 Hudson Yards, Extell's 570 Fifth Ave., SL Green's 346 Madison Ave. and BXP's 343 Madison Ave. don't factor into the average asking rent calculations because they don't exist yet. That leads to sticker shock for tenants who are shopping for space and are expecting rents in the double digits per SF.

After years of industry professionals touting the “flight to quality” in the office market while most buildings suffered vacancies, the dynamic has started to flip.

Companies that need Midtown space are now finding they have to swallow less-than-ideal circumstances to accommodate their teams.

Kirkland & Ellis, whose main office is at 601 Lexington Ave., expanded its foothold at nearby 900 Third Ave. by 52K SF. Evercore took space at 599 Lexington Ave. because its headquarters at Park Avenue Plaza has no space to grow into, Margolin said.

“They needed more space, so they had no choice,“ Margolin said. “It’s a phenomenon that we’re seeing a lot now.”

Artificial intelligence companies are creating a similar phenomenon in Midtown South, elbowing out companies with less aggressive space needs. Anthropic last quarter leased all 466K SF of 330 Hudson St.

“There’s so many of these companies taking a lot of space. They’re taking big chunks of space and growing very quickly,” Margolin said. “That’s creating a challenge for a lot of the other tenants.”

There is no relief in sight, even though there is now almost 10M SF of office space under construction in Manhattan, up from 7.7M SF at the end of June, according to JLL.

All of the buildings that have broken ground have an anchor tenant, and delivery is still several years away. The next to break ground could be Tishman Speyer's 99 Hudson Blvd., where Sony is in talks for what could be nearly half the building, Commercial Observer reported.

“It now makes sense for these office buildings to come out of the ground,” Margolin said. “It just doesn’t happen quickly.”