Manhattan’s office leasing frenzy is no secret, but the way it’s seeping into secondary markets gets less attention.
JLL’s latest data shows that as trophy space in prime corridors becomes scarce and rents skyrocket, companies are looking more favorably on Midtown’s Lexington Avenue and even at the market’s weakest link, Midtown’s Third Avenue.
Leasing on Third so far this year is on track to top all of its 2025 activity as tenants broaden their searches to escape drum-tight 4.9% trophy availability elsewhere and rents north of $200 per square foot.
In fact, Lexington and Third Avenues north of 42nd Street posted the fastest growth in lease counts from 2021 to 2025 — 28.6% and 18.4% annually, respectively — and Third Avenue is on pace to surpass its entire 2025 leasing activity this year.
A breakthrough in the previously moribund market east of Park Avenue came when Bloomberg LP extended its 750,000 square-foot lease and added 175,000 more at SL Green’s 919 Third Ave. two years ago, a deal first reported in The Post.
Others took the cue. “There’s only so much trophy space to go around,” said JLL senior research director Andrew Lim.
“Tenants still want a great building, amenities and an owner that’s investing in the property, but because vacancy on prime avenues is so low, they are having to cast a much wider net to find what they need,” he said.
“You can see it happening on Lexington Avenue. This year alone, we’ve seen companies move from 300 Park, 280 Park and 430 Park to 560 Lexington, while others are expanding in the building,” Lim said.
“Third Avenue is starting to benefit from the same dynamic,” Lim said. “There are good buildings there that have been upgraded and can offer tenants much of what they’re looking for at a different price point.”
New leases on Third in 2026 have included Kirkland & Ellis’s impressive 52,000 square-foot expansion at 900 Third; a new, 28,000 square-foot lease for Industrious at 857 Third; for Dutchess Management at 757 Third; and deals at 880, 685 and 950 Third.
Lexington has seen more than 110,000 square feet of leasing so far this year including for Marex and SummitTX at 560 Lexington and five law firms and financial groups at 370 Lexington.
Running parallel to the trend is a surge in significant property investment by landlords, such as Waterman Interests’ and HPS Investment Partners $80 million top-to-bottom upgrade of mostly vacant 850 Third, where a 4,500 square-foot restaurant from the Kellari team just signed a lease. The repositioned tower will be re-launched later this year.
Ongoing residential conversions, such as at SL Green’s 750 Third, will enliven the corridor with new apartment tenants as well.