Good morning. Manhattan’s office map is being redrawn as companies flock west to the Penn District in record numbers. A surge of relocations, rising rents, and new Class A supply is turning the area into the city’s dominant office hub.

🎙️ This Week on No Cap: Brixmor CEO Brian Finnegan shares how Brixmor built a 60M+ SF retail platform around everyday demand, and why that strategy is paying off.

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Market Snapshot

Most Active Neighborhood
By Deal Count
Crown Heights (10 sales)
Properties Sold
All Asset Types
152
Transaction Volume
Sales Activity
$801.9M
Top Office Submarket
Avg Starting Rent
Park Avenue
$139.23 / SF
Manhattan Office Rent
Avg Effective
$76.72 / SF
Office Rent Growth
YoY Change
+13.8%
*Office metrics courtesy of CompStak; data from 12/31/25 to 2/28/26. Sales metrics courtesy of Actovia; NYC properties reported sold during the week of 4/10/26–4/16/26.

Power of Penn

Penn Station Is Now Manhattan's Office Relocation Destination

A wave of relocations is turning the Penn Station area into the city’s most competitive office hub.

The flight to Penn: Nearly a quarter of all Manhattan office relocations between 2023 and 2025 ended up in the Penn Station submarket, according to a new report from Cushman & Wakefield. That's 3.5M SF of inbound tenants, with 83% arriving from neighboring Midtown submarkets.

Source: Cushman & Wakefield

Who's moving in: Financial services firms claimed 24% of that space, followed by professional services at 23.7% and tech at 18.8%. The tenant roster includes Universal Music Group (336K SF at Penn 2 for 22 years), Verizon (203K SF for 10 years), and FSG Global (80K SF for 15 years) — all of them trading up in size.

The supply story: Fourteen buildings developed or renovated over the past decade added roughly 23M SF to the submarket, expanding inventory by 124.2%. The result: those buildings carry a combined vacancy rate of just 6.5%, against Manhattan's citywide 19.9%. Six more projects in the pipeline will add another 30.1% to Class A inventory over the next seven years.

Relocating to Penn isn't cheap: Average asking rents run 37.8% above the Midtown average. But demand isn't softening. Penn 2 alone logged 908,000 SF of leasing in 2025 at average starting rents of $109 PSF, with average lease terms exceeding 17 years, per Vornado CEO Steven Roth's February earnings call. The tower is now 80% occupied.

Bucking the trend: Most of Manhattan is rationalizing space. Penn Station tenants are doing the opposite. C&W found that companies relocating to the submarket are significantly more likely to expand their footprint — a dynamic C&W research director Lori Albert attributes to Penn 2's availability of large, contiguous blocks that have since been largely absorbed.

➥ THE TAKEAWAY

Power shift: Penn Station’s evolution isn’t just a recovery story—it’s a reshuffling of Manhattan’s office gravity, where modern space, transit access, and large floorplates are pulling tenants west and redefining what “prime” office really means.


Around New York

➥ NYC’s housing market rebounded in March with rising sales activity and tightening rental conditions, as warmer weather and improved affordability fueled demand.

➥ A proposed NYC tax on second homes over $5M is rattling luxury buyers and brokers, who warn it could dampen demand in a key high-end segment.

➥ The head of a NYC housing nonprofit was briefly jailed after failing to complete court-ordered repairs, underscoring rare legal consequences for unresolved building violations.

➥ NYC is planning a city-backed insurance program to cut costs for affordable housing landlords by up to 30%, aiming to stabilize operations and preserve units.

➥ NYC prime retail availability held at a record low as rents edged higher, signaling continued demand despite broader economic headwinds.

➥ NYC’s Housing Connect system faces calls for reform as overwhelming demand and inefficiencies delay lease-ups and leave affordable units sitting vacant.

➥Union Square reached 91.4% retail occupancy in Q1 2026, driven by a wave of food-and-beverage openings, new leasing activity, and a foot-traffic boost from Uniqlo’s debut.

➥A growing construction worker shortage is threatening to delay timelines and drive up costs across New York City’s multibillion-dollar infrastructure pipeline.

Follow the Money

AFFORDABLE HOUSING NEW YORK CITY NYC pension funds will invest $4B in affordable housing to boost development and conversions amid an ongoing housing shortage.
MULTIFAMILY CHELSEA MAG Partners secured a $149M refinance for its nearly fully leased Chelsea residential project, signaling strong lender confidence.
INDUSTRIAL STATEN ISLAND NYC’s largest new single-story warehouse, a 331K SF facility at One Nassau Place, has hit the market as industrial demand continues to outpace supply.
CONVERSION MURRAY HILL CSC Real Estate secured a $108M loan to convert a Murray Hill office building into 140 apartments, signaling continued momentum for office-to-resi projects in NYC.
OFFICE MIDTOWN MANHATTAN An Apollo platform company signed a nearly 50K SF lease at 590 Madison Avenue, expanding its footprint as the firm consolidates NYC operations into premier Midtown space.
OFFICE MIDTOWN EAST Robinson+Cole’s 48K SF deal at 100 Park Avenue pushed the Midtown tower to full occupancy, underscoring continued demand for high-quality office space.

📈 CHART OF THE WEEK

Marcus & Millichap | Sources: CoStar Group, Inc.; Real Capital Analytics; RealPage, Inc.

NYC tops the nation at roughly $533/SF, underscoring how extreme supply constraints and zoning pressures are driving self-storage values far above other already pricey markets.


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