Manhattan's office leasing activity is shifting towards secondary markets, particularly Lexington Avenue and Third Avenue, as prime office space becomes limited. According to JLL's latest data, leasing activity on Third Avenue is expected to exceed all of its 2025 activity this year, driven by a tight availability of trophy office space at 4.9% and rising rents above $200 per square foot. From 2021 to 2025, Lexington Avenue and Third Avenue north of 42nd Street have experienced significant growth in lease counts, with increases of 28.6% and 18.4% annually, respectively.
A notable development occurred when Bloomberg LP renewed its lease for 750,000 square feet and added an additional 175,000 square feet at SL Green's 919 Third Avenue, which has encouraged other companies to explore leasing options in the area. JLL senior research director Andrew Lim stated, "There’s only so much trophy space to go around," highlighting that tenants are expanding their searches due to low vacancy rates on prime avenues.
This year, companies have moved from locations on Park Avenue to 560 Lexington, with Third Avenue also seeing increased interest. Recent leases on Third Avenue include a 52,000 square-foot expansion by Kirkland & Ellis at 900 Third and a new 28,000 square-foot lease for Industrious at 857 Third. Lexington Avenue has recorded over 110,000 square feet of leasing activity this year, involving firms such as Marex and SummitTX.
Additionally, property investments are rising, exemplified by Waterman Interests and HPS Investment Partners' $80 million renovation of 850 Third Avenue, which is expected to include a new restaurant. Ongoing residential conversions, such as at SL Green's 750 Third, are anticipated to enhance the area further.