September 2025 Newsletter

What's Changing in the Office Market | 

The New York City office market is clearly strengthening, a trend I’ve been flagging for some time here. Starting with Class-A buildings (where demand first returned post-COVID), activity is now broadly distributed across all classes of office space with increased absorption, velocity, and rents.

When people ask, “What changed?” the most obvious answer is simply demand, mainly because employee/employer dynamics are different today than in 2020-22. Back then, interest rates were low, capital was abundant, and employers were in an arms race to recruit and retain talent.

Big Law and Finance firms were dangling bonuses to poach low-level associates, startups were ferociously spending their way to scale (#metaverse & NFTs?), and flexible WFH was the cherry on top. In other words, employees had the leverage.

Now, the environment is more constrained. Liquidity is tighter and interest rates are higher. Competitive businesses that prefer employees "in" the office are calling the shots because remote models came with costs (productivity, culture, oversight) that many companies weren’t willing to sustain at high scale.

Office attendance also shows recovery: the Partnership for New York City’s survey in March 2025 reported ~76% of pre-pandemic attendance, with cell phone traffic data suggesting near ~95% in some cases. NYC Comptroller's Office

For Midtown business execs who occupy office space or negotiate leases, here are the takeaways and implications:

1. Leverage is shifting toward landlords for quality, amenitized office space, meaning less flexibility on concessions, more competition, & rising rents.
2. Renewal / expansion timing matters to lock in favorable terms earlier that could yield savings or better positioning as availability tightens further. If your lease expires in the next 2-3 years, begin your review process now.
3. Location & building features will increasingly drive value - transit access, modern amenities, environmental certifications, flexible layout, etc. If your space lacks these, expect relative underperformance (in terms of cost per sq. ft., retention, productivity). Investing or upgrading may pay off.
4. Budgeting for rising costs - Operating expenses, maintenance, taxes, improvements: with strengthening demand, all these cost levers tend to become less negotiable. Plan accordingly!

Until next month,
Ben

Ben Blumenthal
Principal Broker | Noah & Co.

For the rest of our September 2025 Newsletter, click here.