Think back to Y2K.
Companies with names like DoubleClick and iVillage were driving Manhattan’s dot-com boom.
Real estate had billion-dollar deals in the works like Larry Silverstein’s for the World Trade Center and Tishman Speyer buying the majority stake in Rockefeller Center.
And Manhattan office leasing was dizzying, on its way to a record 50 million square feet.
It never reached that number again.
Now, buoyed by companies, this time with names like Google (DoubleClick’s successor) and Anthropic, office leasing is on track to record its best year since 2000 and drawing comparisons to Manhattan’s hottest — albeit short-lived — gangbusters days.
“My recollection of that period of time was one, it was great [and] two, it was brief,” said SL Green CEO Marc Holliday, who in 2000 had spent two years on the job as the chief investment officer at the company.
If today’s good times continue, 2026 will end with 43.81 million square feet of office leasing, according to Colliers. That would edge out the 42.01 million square feet recorded in 2001 — leaving 2000’s 50.9 million square feet as the most active year of office leasing on record in Manhattan.
Today’s leasing is driven by law firms, Wall Street and a tech industry that’s growing — though not as dominantly as at the turn of the century — but the amount of office space companies take has been tempered by the close quarters of cubicle workers.
Holliday said the Y2K market was different in that today’s market has more legs and resiliency, and tenants have better financials and stronger credit ratings than they did 26 years ago.
The burst of the dot-com bubble, followed by Sept. 11, ended the boom and its effect on the office landscape. Chatter now is that AI could be a bubble too, and inflation, the Iran war and high interest rates threaten slowdowns.
Which raises the question: Can this booming market continue its bull run? Or will it be a once-in-a-quarter-century year, ending with a bust the way the dot-com era did?
Record setting
A look at Wall Street, which remains the lifeblood of Manhattan’s economy, helps explain the record office activity.
Wall Street profits reached nearly $46 billion in the first half of the year, according to a report from the New York State Comptroller’s office. If the pace continues, it could hit record revenue for 2026.
Big finance has remained resilient despite geopolitical tensions and economic uncertainty, Comptroller Thomas DiNapoli added. And barring a recession or a major disruption, “strong profits should continue.”
In fact, despite the buzz around AI, it’s actually bread-and-butter industries like finance and legal services that are driving the leasing boom.
The year’s largest office deal, and the largest in Manhattan in six years, was the law firm Simpson Thacher’s 916,000-square-foot lease to anchor Gary Barnett’s new office tower at 570 Fifth Avenue.
“It used to be a big deal if a company was a unicorn. [Now,] all of these companies no one’s ever heard of two years ago are now valued at multi billions of dollars.”
AI tenants leased less than that (800,000 square feet) in all of the second quarter.
A bigger driver is the lack of available space.
Save for the headquarters JPMorgan Chase opened for itself at 270 Park Avenue last fall, Manhattan hasn’t seen a new office building since SL Green opened One Vanderbilt in 2021. The pandemic put a pause on new construction, which has created a dearth of new space.
The next crop of new buildings (which includes Related’s 625 Madison Avenue and 70 Hudson Yards, SL Green’s 346 Madison Avenue and Citadel’s 270 Park Avenue with Vornado and Rudin) isn’t expected to start coming online until 2030.
Adding to the squeeze, lots of space has come offline through office-to-resi conversions.
Companies are anxious that if they don’t act now, they won’t be able to get the space they want.
“As key industries are signing large leases and we’re seeing news about the recovery, that’s propelling more tenants to engage the market,” said Colliers research director Franklin Wallach, who added that tenants with leases expiring in the next few years would normally wait later to start searching for space. “Now, because of the tightening availability, they’re engaging the market earlier.”
Go-go days
“Up, Up and Away (Per Square Foot)” and “Firms in Bidding War for Midtown Space” are some of the headlines the New York Times ran in 2000.
That year, the Durst Organization opened up its new office tower at 4 Times Square, which was the first new Manhattan office building in a decade.
CBRE’s Mary Ann Tighe said what she remembers most is how voracious dot-com companies were for space, seemingly without concern about whether or not they needed all of it.
“It was a very strange period in that the dot-com and telecom firms were not what I would characterize as informed buyers,” she said. “They were just gobbling up space.”
And if early-2000s tech companies seemed to have deep pockets, their finances look quaint compared to spending by today’s AI firms.
“The magnitude of capital was a fraction of what we’re seeing now,” said Newmark’s David Falk. “It used to be a big deal if a company was a unicorn. All of these companies no one’s ever heard of two years ago are now valued at multi billions of dollars.”
If 2000 seems like a foreign era, it’s even more remarkable that its leasing record has stood for more than 25 years when you consider how much the city has grown.
New York City had about 3.8 million jobs in 2000, according to the state’s Department of Labor. That’s about 1 million fewer jobs than the city has in 2026.
Blame the cubicles. Part of the reason leasing didn’t climb with all that job growth is because of densification: tenants over the past two decades have packed their employees more tightly into workspaces. But industry experts say that, at least anecdotally, that trend has reached its limit and is reversing as companies look to give workers elbow room.
If that’s true, this near-record leasing could have some more steam behind it.
But if companies really are leasing space to get in early on new office towers before they’re built, that new product is going to get filled up eventually. Only so much pent-up demand remains from the work-from-home era.
Macro factors could also dampen all that Wall Street excitement.
The yield on the 10-year U.S. Treasury hit 5.73 percent in early October — its highest level since 2002.
And, much of that Wall Street and Big Law business is driven by the AI boom, so they could pop if it does.
Even if annual leasing soon nears or crosses 2000’s 50.9-million-square-foot record, the market might not ever be like that golden era.
To wit: In September, Manhattan’s average office rent was about $74 per square foot, according to Cushman & Wakefield. In 2000, it was roughly $49 which, adjusted for inflation, is approaching $100 per foot.
The good old days, indeed.
