April 2026 Newsletter

Midtown Office Market: The Costs You Don’t See Are Starting to Matter More | 

A few things I’ve been seeing consistently in the market lately across multiple office leases we’ve been negotiating; Leasing activity is holding up and asking rents (especially in the middle tier of Midtown) have been moving in one direction.... ↗️↗️

Depending on the building and product, we’re regularly seeing rents that are 25–30% higher than they were 18–24 months ago. Not across the board, but frequent enough that it’s notable.

At the same time, on the landlord's side, there’s a renewed conversation happening around construction costs.

Not just that they’re higher (they are), but that they’re harder to pin down. Between labor constraints, material price swings, and the general friction of getting work done in Manhattan, buildout budgets are less predictable than they used to be.

Interior office buildouts in NYC are commonly landing anywhere from ~ $120 to $300+ per square foot depending on scope, with meaningful variability tied to mechanical and infrastructure work. Timelines that used to be quoted in months are often stretching beyond initial expectations once permits and coordination kick in.

What’s been interesting is how this is shaping behavior on both sides of the table. There’s growing attention on spaces that can be reused or lightly modified without triggering major infrastructure work.

Because here’s the part that tends to get overlooked:

• The visible finishes - glass fronts, paint, flooring - are typically a minority of the total cost
• The bulk sits above the ceiling
• HVAC distribution alone can account for a significant portion of a buildout budget.
• Same with electrical upgrades, sprinkler modifications, and code-driven requirements tied to fire alarm and egress.
• Add in DOB filings, union labor coordination, inspections… and the “simple” project starts to look less simple.

And importantly, a lot of these trades don’t scale down neatly. Whether you’re doing 5,000 feet or 25,000 feet, you’re still dealing with the same systems, approvals, and mobilization.

So while rising rents are the headline, the more subtle shift is underneath where it’s becoming more worthwhile for Tenants to start paying closer attention to what already exists in a space, and how it can be modified to suit them.

By the same token, Landlords, in many cases we’ve seen, are being more selective about where they deploy capital, especially if the path to delivering a space involves heavy mechanical work.

It’s not a dramatic shift. But it’s a noticeable one.

Until next month,
Ben

Ben Blumenthal
Principal Broker | Noah & Co.

For the rest of our April 2026 Newsletter, click here.