Manhattan office leasing posts strongest Q1 since 2014 as AI tenants add momentum

Manhattan office leasing totaled about 11.8 million square feet in the first quarter of 2026, the largest first-quarter tally since 2014, according to market reports. The gains were driven by a mix of renewals, relocations and new commitments.

Notable transactions included Bank of America’s roughly 2.4 million square foot renewal and Clay’s 163,000 square foot lease at 11 Madison Avenue. Brokers also flagged more than 600,000 square feet of leasing linked to AI-related tenants during the quarter.

Availability in Manhattan tightened to around 13.7 percent, a move market watchers say is meaningful after years of elevated space on the market. The change reflects both new demand and some net absorption, but availability remains well above historic lows.

While the quarter represents a clear improvement, the picture is not uniformly rosy: the uptick includes large renewals and a mix of deal types, and it remains unclear whether AI-driven demand will be sustained or how much of the activity represents relocations versus true net new office occupation.

Brokers and analysts called Q1 a meaningful step in Manhattan’s office recovery but urged caution, noting that one strong quarter does not equal a full market turnaround and that further quarters of consistent demand will be needed to confirm a durable trend.