Market Intelligence · Q2 2026
A curated look at office and retail market conditions across Manhattan and Brooklyn — updated quarterly.
Data sourced from Q2 2026 broker research reports · Updated September 2026
Q2 2026 Snapshot
New York City's commercial real estate market held onto its momentum in the second quarter. Manhattan leasing activity eased slightly from an exceptional Q1, but first-half volume was still the strongest since 2014, office availability tightened to a six-year low, and retail availability across premier corridors fell to its lowest rate on record. Legal services overtook financial services as Manhattan's top-leasing sector for the first time in nearly six years.
Market data is derived from Q2 2026 broker research reports published by CBRE, Cushman & Wakefield, and Cresa. Figures may vary by methodology, building class coverage, and whether sublease space is included. All statistics are for informational purposes only and do not constitute investment or leasing advice. Information is subject to change.
By Market & Property Type
Manhattan office leads the recovery while retail hits historic lows. Brooklyn offers a compelling alternative for cost-conscious tenants willing to trade address for value.
Manhattan's office market cooled modestly in Q2 after an extraordinary start to the year, but availability kept tightening — falling 50 basis points quarter-over-quarter to a six-year low of 15.0%, down from 17.7% a year ago. Leasing activity eased 6.8% from Q1 to 10.8 million square feet, though first-half volume was still the strongest since 2014. Legal services overtook financial services as Manhattan's top-leasing sector for the first time in nearly six years, accounting for 29.8% of quarterly volume, driven by Simpson Thacher & Bartlett's full-building, 916,000-SF commitment to Extell's planned tower at 570 Fifth Avenue — a milestone that follows American Express's 2-million-square-foot commitment at Two World Trade Center in Q1.
All three major markets recorded availability declines: Midtown South led with a 110-bps drop to 16.4%, Downtown fell 70 bps to 17.4%, and Midtown edged down 10 bps to 13.9%. On CBRE's narrower tracked set of large, modernized Midtown buildings, vacancy sits even tighter at 10.0% — the lowest level since 2020 — as tenants increasingly turn to preleasing in future developments to secure large, high-quality blocks that no longer exist in the current inventory.
| Submarket | Availability Rate | Asking Rent/SF/Yr |
|---|---|---|
| Plaza District | 12.3% | $102.44 |
| Soho | 16.3% | $90.12 |
| Columbus Circle | 15.8% | $86.71 |
| Times Square | 19.4% | $85.07 |
| Grand Central | 13.6% | $84.61 |
| Penn Plaza / Hudson Yards | 11.0% | $83.62 |
| Midtown South (overall) | 16.4% | $74.66 |
| World Trade Center | 15.3% | $62.26 |
| Downtown (overall) | 17.4% | $59.30 |
Full-service asking rents per SF/year. Source: Cresa Q2 2026. Ranges vary by building class and methodology.
Brooklyn's office market kept tightening in Q2 2026, with overall vacancy falling to 19.9% — its lowest level in six years and 320 basis points below a year ago. Downtown Brooklyn led the improvement, dropping 330 bps quarter-over-quarter on the approved office-to-residential conversion at 141 Willoughby Street, which pulled space out of the office inventory entirely. Northern Brooklyn tightened modestly to 15.1%, while Coastal Brooklyn ticked up to 22.8% after 66,200 SF of new sublease space hit the market.
New leasing activity jumped 181.5% quarter-over-quarter to 395,687 SF, anchored by Borough Hall, which captured 71.7% of the quarter's volume. Class A space accounted for two-thirds of leased square footage on just a third of transactions, while smaller Class B/C deals made up the rest — continued evidence of demand for more affordable office space.
| Submarket | Avg Asking (All) | Class A Asking |
|---|---|---|
| Downtown Brooklyn | $55.28 | $58.22 |
| Coastal Brooklyn | $48.80 | $53.17 |
| Northern Brooklyn | $42.02 | $48.64 |
| Brooklyn Overall | $51.01 | $55.08 |
Full-service asking rents per SF/year. Source: Cushman & Wakefield Q2 2026. Brooklyn rents continue to run well below comparable Manhattan submarkets, keeping the borough an attractive alternative for cost-conscious tenants.
Notable Q2 Transactions
Brooklyn Defender Services — 212,000 SF new lease at 181 Livingston St (Borough Hall)
Goodwill — 30,816 SF expansion at 25 Elm Place (Borough Hall)
Rising Ground — 20,500 SF new lease at 111 Livingston St (Borough Hall)
Manhattan retail availability across premier corridors fell to 10.4% in Q2 2026 — the lowest rate on record and a sharp improvement from the pandemic-era peak of 27.8% in Q1 2021. Leasing activity held steady at 2.2 million square feet through the first half of the year, down just 1.8% from 2025, a dip that reflects scarce available space more than any pullback in demand. Upper Fifth Avenue and Lower Madison Avenue saw the sharpest tightening, each contracting 5.8 percentage points year-over-year, while Upper Madison Avenue — newly tracked in 2026 — closed the quarter with a market-low 2.2% availability rate.
Food and beverage remained Manhattan's most active category at 39.4% of year-to-date leasing volume, followed by apparel and accessories at 21.0%, with SoHo leading all submarkets at 22 signed leases. Address prestige continued to drive demand: Broadway, Fifth Avenue, and Madison Avenue together accounted for 40.2% of disclosed YTD volume. Average asking rents climbed 1.1% year-over-year to $710 psf overall, led by Third Avenue (+10.6%) and Meatpacking (+10.3%, aided by Gucci's newly marketed storefront), while Times Square and Lower Manhattan posted the steepest declines.
| Corridor | Asking Rent/SF/Yr | Availability |
|---|---|---|
| Upper Fifth Ave (49th–60th) | $2,459 | 11.6% |
| Times Square Bowtie | $1,490 | 15.8% |
| Madison Ave (57th–72nd) | $883 | 9.4% |
| Upper Madison (72nd–86th) | $743 | 2.2% |
| Fifth Ave (42nd–49th) | $647 | 14.8% |
| Herald Square / W. 34th | $470 | 30.5% |
| Meatpacking | $321 | 17.3% |
| SoHo | $393 | 9.0% |
| Flatiron / Union Sq West | $306 | 10.3% |
| Lower Manhattan | $203 | 15.6% |
Gross asking rents per SF/year. Source: Cushman & Wakefield Q2 2026. Retail rents vary significantly by block, floor, and visibility. Off-market transactions are common in the most competitive corridors.
Key Submarkets
Office and retail activity is spread across distinct corridors in Manhattan and Brooklyn, each with its own rent profile, tenant mix, and demand drivers.
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