Manhattan Commercial Market Report: H1 2026 (Office & Retail)

Manhattan's office market just posted its strongest first half of leasing since 2002, availability fell to its lowest point since October 2020, and the sublease overhang that defined the last five years is now smaller than it was before the pandemic. Retail is a slower story — asking rents are still roughly 30% below their 2016 peak — but the gap between what owners ask and what they actually get is closing fast.

Here is the H1 2026 data, and the parts of it that are easy to misread.

Office: The Headline Numbers

Meraki Realty analysis, Q1–Q2 2026.

Three numbers carry the half:

1. H1 2026 leasing totalled 22.80M SF — the strongest first half since 2002 (23.05M SF), and up 10.5% over H1 2025. If the second half holds pace, 2026 finishes as the biggest year since 2000.
2. Availability fell to 13.0%, the ninth consecutive quarter of tightening or stable availability — the longest such run since 2007.
3. Asking rents reached $78.03/SF, up 5.7% year over year — the sharpest mid-year growth since 2016, and now only 1.8% below the March 2020 pre-pandemic average of $79.47.

The Sublease Glut Is Gone

This deserves its own section because it was the defining feature of the Manhattan office market from 2020 onward, and it has quietly ended.

Sublet availability now stands at 10.81M SF — down 22.1% in twelve months, a ninth consecutive quarterly decline, and 9.2% below where it stood in Q1 2020. There is less sublease space on the Manhattan market today than there was before the pandemic.

Total available supply tells the same story: 68.10M SF, down 30.5% from the post-pandemic peak of 98.05M SF in February 2024.

Concessions Are Splitting in Two Directions

This is the most actionable table in the report, and it is not in any headline we have seen.

Meraki Realty analysis. Based on direct deals with 5+ year terms.

Concessions on new deals are tightening — free rent is down about a month and a half. But renewal economics moved hard toward the tenant: renewal TI allowances jumped 52%, and renewal free rent rose by a month and a half.

Read: landlords are paying up to keep sitting tenants rather than risk re-letting. If you are an owner heading into a renewal negotiation, your counterparty has more leverage than the tightening market implies. If you are weighing a renewal against going to market, the market is genuinely strong — but the renewal is where you will spend capital.

Office by Submarket

Meraki Realty analysis, Q2 2026. Availability fell or held in 17 of 18 submarkets; only Penn Plaza/Garment District rose.

The spread runs from 4.5% availability in Hudson Yards to 21.8% in the Financial District — and the FiDi number is the one to watch, because much of that space is being removed for residential conversion rather than leased.

Retail: Still Below Peak, But the Gap Is Closing

Manhattan retail asking rents across the prime corridors remain more than 30% below their pre-pandemic peaks, which is the number most coverage stops at. The more useful number is what owners are actually collecting.

Taking rents reached 84.0% of asking in Q2 2026 — up 340 basis points in a single quarter and 310 basis points year over year. In the most supply-constrained corridors, taking rents hit 90% of asking.

That is the real recovery signal. Asking rents are a wish; taking rents are the deal.

Supply is genuinely scarce

• Direct ground-floor availabilities across the 16 prime corridors: 170 spaces, down 8% year over year and 41% below the Q2 2021 peak of 290.
• Ground-floor frontage availability rate: 14.8%, down from 24.4% in Q2 2021.
• SoHo and Madison Avenue each have fewer than 20 actively marketed storefronts.
• Bleecker Street in the West Village has exactly one storefront available — a partial lower-level space asking $165/SF.

Retail corridor asking rents

Meraki Realty analysis, H1 2026. Harlem and the West Village are excluded — too few available storefronts to produce a meaningful average.

Meatpacking is the standout — up 63.5% year over year and the only tracked corridor now trading above its prior peak (+16.7%). Treat it carefully: the corridor is small, and the jump came substantially from a single high-priced Gucci corner storefront entering the average. Leasing along the corridor remains uneven.

Madison Avenue's 13.2% decline is also not what it looks like. Availability is down to 14 storefronts and more than half carry annual rent above $1M. Several owners have stopped quoting asking rents entirely or require leasing an entire multi-level block — which mechanically drags the reported average down while the market itself tightens.

Where the demand is

Food and beverage dominated Q2 retail leasing with 36 deals totalling 161,124 SF — roughly half of all tracked transactions. Entertainment ranked second by square footage on only four deals, and apparel third with 18 deals.

By neighborhood, Flatiron/Union Square was Manhattan's most active retail market in Q2, with 16 deals across 90,092 SF.

What We Would Do With This

1. If you have a renewal coming up, price it against the renewal concession data, not the headline market. Renewal TI is up 52% year over year. The tightening market does not mean your sitting tenant has lost leverage.
2. Check whether your submarket's move is composition. Tribeca, the Insurance District, and Hudson Yards all posted dramatic Q2 numbers driven by one or two blocks of space. Your building's comparables matter more than your submarket's average.
3. For retail, watch taking rent, not asking rent. At 84% of asking and climbing, the spread has narrowed materially. If you are still underwriting a 2023-era gap between ask and take, you are underpricing.
4. Class B office is at a record asking rent ($70.58/SF) with availability at its lowest since January 2021. If you own B product and have been pricing defensively, that stance is now out of date.
5. Downtown is bifurcating. The Financial District sits at 21.8% availability while the World Trade Center is at 11.9% and the Insurance District at 8.2%. "Downtown" is no longer a useful pricing unit.

Methodology

This report covers Q1 and Q2 2026.

Office. The tracked universe is 522.43M SF — commercial office properties with at least 25,000 SF of office inventory across Midtown, Midtown South, and Downtown. Government owner-occupied properties are excluded. Leasing activity counts all lease types above 5,000 SF, including new leases, renewals and expansions, with a minimum twelve-month term.

Retail. Ground-floor asking rents across Manhattan's 16 prime retail corridors, plus the taking-rent index, availability counts, and neighborhood-level leasing activity.

Two definitional points worth knowing, because they explain most of the contradictory numbers you will see elsewhere:

1. Availability is not vacancy. Availability counts space being marketed for occupancy within the next twelve months; vacancy counts space physically empty today. The same market can honestly be described as roughly 13% available and roughly 19% vacant. Both are correct. They are not interchangeable, and a year-over-year comparison that switches between them is meaningless.
2. Retail corridor boundaries are not standardised. Different research groups draw "Times Square" or "Third Avenue" differently, and the resulting rents can differ by multiples — not percentages. We hold to one consistent set of corridor boundaries throughout this report and do not mix figures drawn on different ones.

On composition. Manhattan submarkets are small enough that a single large block entering or leaving the market can move a quarterly average by double digits. We flag those cases explicitly rather than reporting them as market movement — see the callout above. Any figure in this report that reflects one or two transactions rather than a trend is labelled as such.