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Manhattan Class B office demand rises as Class A leasing cools
In the first half of 2026, Class A new leasing fell to 10.3 million square feet from 11.6 million a year earlier, while Class B and C leasing reached about 7.0 million square feet.
Commercial Observer reports that the shift in Manhattan office demand is starting to move away from Class A amenities-driven leasing toward more value-oriented space in Class B.
According to CoStar data cited by Commercial Observer, overall New York office demand remains strong, but Class A new leasing in the first half of 2026 was lower than the same period in 2025, slipping from 11.6 million square feet to 10.3 million square feet.
At the same time, Class B and C demand increased, supported by factors that include less Class A availability and rising Class A rents. New leasing for Class B and C office in the first half of 2026 reached around 7 million square feet, exceeding B and C activity in each of the past three years and topping the pre-pandemic 2015 to 2019 average of about 6.4 million square feet.
Commercial Observer adds that CoStar said Class B and C accounted for about 39 percent of new leasing activity pre-pandemic, falling to 31 percent last year and rising back to roughly 40 percent in the first half of this year. The article notes that Class B operators are increasingly competing by offering some of the amenities that were previously more common in Class A spaces.