Office Leasing Trends in Manhattan’s Secondary Markets

The surge in office leasing in Manhattan is well-known, yet the impact on secondary markets often flies under the radar.

Recent data from JLL indicates that as premium office spaces in prime areas dwindle and rental prices reach new heights, companies are increasingly interested in areas like Midtown’s Lexington Avenue, and even the less desirable Midtown Third Avenue.

This year, leasing activity on Third Avenue is on track to exceed all leasing done in 2025, as businesses expand their search for space amid tight availability—only 4.9% of trophy spaces are up for grabs—while the rental rates exceed $200 per square foot.

Interestingly, Lexington and Third Avenues north of 42nd Street have seen the steepest increase in lease activity between 2021 and 2025, with growth rates of 28.6% and 18.4% per year, respectively. This means Third Avenue could outpace its entire leasing activity for 2025 within this year.

A turning point for the previously sluggish market east of Park Avenue occurred when Bloomberg LP renewed its substantial lease of 750,000 square feet and added another 175,000 square feet at SL Green’s 919 Third Ave., a deal that caught attention two years ago.

Others have followed suit. “There’s only so much trophy space to go around,” JLL’s senior research director Andrew Lim explained.

“Tenants still desire high-quality buildings, desirable amenities, and an owner committed to enhancing the property. However, with minimal vacancy in prime locations, they are having to expand their search significantly,” Lim noted.

“We’re observing the effects on Lexington Avenue. This year, firms have migrated from places like 300 Park, 280 Park, and 430 Park to 560 Lexington, with some even expanding within the same building,” he added.

“Third Avenue is starting to experience similar trends,” Lim continued. “There are well-maintained buildings available that meet tenants’ needs at more competitive prices.”

This year, new leases on Third Avenue have included Kirkland & Ellis’s notable 52,000 square-foot expansion at 900 Third, a fresh 28,000 square-foot lease for Industrious at 857 Third, and deals at locations such as 757, 880, 685, and 950 Third.

On Lexington Avenue, more than 110,000 square feet of leasing activity has occurred this year alone, featuring companies like Marex and SummitTX at 560 Lexington, alongside five law firms and financial organizations at 370 Lexington.

Simultaneously, there’s been a noticeable increase in property investments by owners. For instance, Waterman Interests and HPS Investment Partners are putting $80 million into a complete renovation of the mostly vacant 850 Third. Notably, a 4,500 square-foot restaurant from the Kellari team just signed a lease there, with the revamped building slated to relaunch later this year.

Moreover, ongoing residential conversions, such as those at SL Green’s 750 Third, are expected to breathe new life into the area by attracting new apartment residents.