New York City’s office market is showing strong signs of stabilization, rapidly returning to traditional office settings. In fact, it is leading the charge nationally, while the rest of the country moves in that direction at a slower but steady pace. Specifically, demand in New York has returned to pre-pandemic levels, driven by a push from employers for in-person attendance and an influx of new workers. Last month, Manhattan office leasing surged 24%, following a 25% year-over-year spike in Q4 2024.
This resurgence of in-office work is also reshaping the residential real estate market. Many employees who relocated to suburban areas during the pandemic are now moving back to the city to reduce commuting times and be closer to their workplaces. With congestion pricing now in effect and the challenge of conforming to train schedules, more workers are seeing the appeal of city living. Some are keeping their primary residences outside the city while renting or buying smaller apartments in midtown and downtown Manhattan.
For employees facing longer and more unpredictable work schedules, daily commutes from distant suburbs are becoming increasingly challenging. As a result, demand for both rentals and purchases in the city has surged, contributing to rising market values. The Department of Finance projects the market value of New York City’s more than one million properties will increase by 5.7% to $1.6 trillion in the upcoming fiscal year beginning July 1. Market values for co-ops, condos, and apartment rentals are expected to rise even more, by 7.3%.
Further, it has been suggested that home prices could very well increase in some areas that have become more attractive due to decreased traffic congestion with the new congestion pricing now in effect. If the initiative successfully reduces noise and pollution, properties within the zone could see increased values, as cleaner and quieter neighborhoods often command higher demand.
On the commercial side, the total market value of office properties is expected to climb 3.8% to $339.5 billion, with trophy office buildings leading the rebound. This recovery signals a shift in confidence, as companies appear more willing to invest in office space despite economic uncertainty.
The resilience of New York City is one of its defining strengths. While the path to recovery has been gradual, it is clear the Big Apple is regaining its momentum—if not already there.