Assume again to Y2K.
Firms with names like DoubleClick and iVillage have been driving Manhattan’s dot-com growth.
Actual property had billion-dollar offers within the works like Larry Silverstein’s for the World Commerce Heart and Tishman Speyer shopping for the bulk stake in Rockefeller Heart.
And Manhattan workplace leasing was dizzying, on its approach to a report 50 million sq. toes.
It by no means reached that quantity once more.
Now, buoyed by corporations, this time with names like Google (DoubleClick’s successor) and Anthropic, workplace leasing is on observe to report its greatest 12 months since 2000 and drawing comparisons to Manhattan’s hottest — albeit short-lived — gangbusters days.
“My recollection of that time frame was one, it was nice [and] two, it was temporary,” mentioned SL Inexperienced CEO Marc Holliday, who in 2000 had spent two years on the job because the chief funding officer on the firm.
If today’s good times proceed, 2026 will finish with 43.81 million sq. toes of workplace leasing, based on Colliers. That may edge out the 42.01 million sq. toes recorded in 2001 — leaving 2000’s 50.9 million sq. toes as probably the most energetic 12 months of workplace leasing on report in Manhattan.
Right this moment’s leasing is pushed by legislation companies, Wall Avenue and a tech trade that’s rising — although not as dominantly as on the flip of the century — however the quantity of workplace house corporations take has been tempered by the shut quarters of cubicle employees.
Holliday mentioned the Y2K market was totally different in that in the present day’s market has extra legs and resiliency, and tenants have higher financials and stronger credit score rankings than they did 26 years in the past.
The burst of the dot-com bubble, adopted by Sept. 11, ended the growth and its impact on the workplace panorama. Chatter now’s that AI might be a bubble too, and inflation, the Iran struggle and excessive rates of interest threaten slowdowns.
Which raises the query: Can this booming market proceed its bull run? Or will or not it’s a once-in-a-quarter-century 12 months, ending with a bust the way in which the dot-com period did?
Record setting
A take a look at Wall Avenue, which stays the lifeblood of Manhattan’s economic system, helps clarify the report workplace exercise.
Wall Avenue earnings reached almost $46 billion within the first half of the 12 months, based on a report from the New York State Comptroller’s workplace. If the tempo continues, it might hit report income for 2026.
Massive finance has remained resilient regardless of geopolitical tensions and financial uncertainty, Comptroller Thomas DiNapoli added. And barring a recession or a serious disruption, “robust earnings ought to proceed.”
Actually, regardless of the excitement round AI, it’s truly bread-and-butter industries like finance and authorized companies which can be driving the leasing growth.
The 12 months’s largest workplace deal, and the biggest in Manhattan in six years, was the legislation agency Simpson Thacher’s 916,000-square-foot lease to anchor Gary Barnett’s new workplace tower at 570 Fifth Avenue.
“It was an enormous deal if an organization was a unicorn. [Now,] all of those corporations nobody’s ever heard of two years in the past at the moment are valued at multi billions of {dollars}.”
AI tenants leased lower than that (800,000 sq. toes) in the entire second quarter.
A much bigger driver is the shortage of accessible house.
Save for the headquarters JPMorgan Chase opened for itself at 270 Park Avenue final fall, Manhattan hasn’t seen a brand new workplace constructing since SL Inexperienced opened One Vanderbilt in 2021. The pandemic put a pause on new building, which has created a dearth of latest house.
The following crop of latest buildings (which incorporates Associated’s 625 Madison Avenue and 70 Hudson Yards, SL Inexperienced’s 346 Madison Avenue and Citadel’s 270 Park Avenue with Vornado and Rudin) isn’t anticipated to begin coming on-line till 2030.
Including to the squeeze, plenty of house has come offline via office-to-resi conversions.
Firms are anxious that in the event that they don’t act now, they received’t be capable of get the house they need.
“As key industries are signing massive leases and we’re seeing information concerning the restoration, that’s propelling extra tenants to have interaction the market,” mentioned Colliers analysis director Franklin Wallach, who added that tenants with leases expiring within the subsequent few years would usually wait later to begin trying to find house. “Now, due to the tightening availability, they’re participating the market earlier.”
Go-go days
“Up, Up and Away (Per Sq. Foot)” and “Corporations in Bidding Battle for Midtown Area” are among the headlines the New York Instances ran in 2000.
That 12 months, the Durst Group opened up its new workplace tower at 4 Instances Sq., which was the primary new Manhattan workplace constructing in a decade.
CBRE’s Mary Ann Tighe mentioned what she remembers most is how voracious dot-com corporations have been for house, seemingly with out concern about whether or not or not they wanted all of it.
“It was a really unusual interval in that the dot-com and telecom companies weren’t what I’d characterize as knowledgeable patrons,” she mentioned. “They have been simply gobbling up house.”
And if early-2000s tech corporations appeared to have deep pockets, their funds look quaint in comparison with spending by in the present day’s AI companies.
“The magnitude of capital was a fraction of what we’re seeing now,” mentioned Newmark’s David Falk. “It was an enormous deal if an organization was a unicorn. All of those corporations nobody’s ever heard of two years in the past at the moment are valued at multi billions of {dollars}.”
If 2000 looks as if a overseas period, it’s much more exceptional that its leasing report has stood for greater than 25 years when you think about how a lot town has grown.
New York Metropolis had about 3.8 million jobs in 2000, based on the state’s Division of Labor. That’s about 1 million fewer jobs than town has in 2026.
Blame the cubicles. A part of the explanation leasing didn’t climb with all that job development is due to densification: tenants over the previous 20 years have packed their workers extra tightly into workspaces. However trade consultants say that, a minimum of anecdotally, that development has reached its restrict and is reversing as corporations look to present employees elbow room.
If that’s true, this near-record leasing might have some extra steam behind it.
But when corporations actually are leasing house to get in early on new workplace towers earlier than they’re constructed, that new product goes to get crammed up finally. Solely a lot pent-up demand stays from the work-from-home period.
Macro components might additionally dampen all that Wall Avenue pleasure.
The yield on the 10-year U.S. Treasury hit 5.73 % in early October — its highest stage since 2002.
And, a lot of that Wall Avenue and Massive Regulation enterprise is pushed by the AI growth, so they may pop if it does.
Even when annual leasing quickly nears or crosses 2000’s 50.9-million-square-foot report, the market won’t ever be like that golden period.
To wit: In September, Manhattan’s common office rent was about $74 per sq. foot, based on Cushman & Wakefield. In 2000, it was roughly $49 which, adjusted for inflation, is approaching $100 per foot.
The great outdated days, certainly.
