Law firm’s 205K-square-foot office lease helps drive Manhattan’s historic third quarter

International law firm Morgan, Lewis & Bockius has inked a massive new lease in Midtown, one of the highlights of a historically busy third quarter for Manhattan’s office market.

The firm has leased 205,000 square feet of space at Hines’ 1251 Sixth Ave., according to Colliers’ latest Manhattan office market report. Colliers declined to disclose the terms of the deal, and neither Hines nor the law firm responded to requests for comment before press time.

The law firm’s New York office is currently at 101 Park Ave., according to its website. It is unclear when it will relocate.

The largest new office lease in the third quarter was artificial intelligence giant Anthropic leasing the entire building – roughly 465,600 square feet of space – at 330 Hudson St. The only bigger lease overall was international law firm Proskauer Rose’s approximately 478,000-square-foot renewal and expansion at 11 Times Square.

Companies leased more than 10 million square feet of office space in total during the third quarter, which was 16.2% higher than five-year quarterly average and 19.2% higher than the 10-year quarterly average. This marked the best third quarter recorded in Manhattan since 2018 and kept New York’s office market on pace to have its best yearly leasing volume since 2000, according to the report.

“The Manhattan office market’s recovery continued at a rapid pace throughout the summer and into the early days of autumn,” Franklin Wallach, executive managing director of research & business development for Colliers in New York, said in a statement. “As we enter the final quarter of the year, the market is beginning a new chapter after achieving several critical recovery milestones in Q3. Notably, Class A pricing reached a new high, Midtown became the first major Manhattan market to return to its pre-pandemic level of availability and Midtown South recorded the strongest third quarter of activity on record.”

Manhattan’s average asking rent increased to $78.36 per square foot, a 0.4% uptick from the previous quarter and its highest asking rent since July 2020, the report says. Availability in the borough dropped to 12.4%, the 10th consecutive quarter it declined or stayed flat.

In Midtown, companies leased about 4.5 million square feet of space during the third quarter, up 2.3% from the prior month and 5.3% from the prior year, the report says. Midtown’s largest leases included the Proskauer Rose and Morgan, Lewis & Bockius deals, along with NBCUniversal Media’s 244,000-square-foot renewal at 1221 Sixth Ave. and General Atlantic’s new lease for 152,000 square feet at 625 Madison Ave.

The neighborhood’s average asking rent was its highest since August 2020 at $85.08 per square foot. Its availability rate dropped to 11.9%, while its roughly 27.7 million square feet of total available supply aligned with where it was before Covid upended the market.

In Midtown South, companies leased about 4.8 million square feet of space, a 5.9% dip from the previous quarter but a 10.7% increase from the previous year. The neighborhood’s largest leases included the Anthropic deal, Havas Health Network’s approximately 254,100-square-foot extension and expansion at 200 Madison Ave. and Snap Inc.’s 199,000-square-foot new sublease at Penn 2.

Midtown South’s average asking rent was $79.57 per square foot, up slightly quarter over quarter and year over year. The neighborhood’s availability rate declined to 11.6%, and its roughly 21.9 million square feet of available supply was the tightest it has been since October 2020, the report said.

Activity was slower downtown, where companies leased 850,000 square feet of space, a 47.2% drop from the previous quarter and a 5.5% decline from the prior year. The area’s largest lease was insurance broker Aon’s 202,000-square-foot renewal at 1 Liberty Plaza.

The average asking rent in Lower Manhattan rose for the eighth quarter in a row to $64.88 per square foot, the highest it has been since July 2020. Downtown’s availability rate dropped to 15.2%, and there was approximately 15.1 million square feet of available supply.