Manhattan office leasing market remains subdued, resulting in a historic volume of direct space availability of 70.3 million square feet, the highest in history, according to Savills’ Q2 market report. 

The report shows that the financial and legal services sectors have remained active, accounting for most of the top ten largest transactions during the quarter, with many being renewals or expansions. The increase in available space is putting pressure on concession packages offered to tenants. It is leading to a downward trend in rental rates, creating a market environment favorable to tenants. 

Class A asking rents saw a slight increase of 1.7% compared to the previous quarter and 0.7% year-over-year. Tenant preferences for trophy or Class A+ space primarily drive this increase. The outlook suggests that there will be a rise in available sublease space as expiring sublet listings are not renewed, especially for spaces that lack built-in infrastructure or furnishings.