Conversion and End Users Drive Manhattan Post-Pandemic Office Sales

It’s hard to believe it’s been five years since the onset of the pandemic. In the dark days of mid-2020, it was difficult to envision what a return to office would even look like. Since then, New York has helped lead the recovery, ranking as a top-three market according to Avison Young’s Office Busyness Index, which measures office utilization for return to office metrics, currently at 71.2% as busy as it was pre-pandemic (the U.S. average is 61.4% as of February 2025.

Since March 15, 2020, there have been 186 office sales in Manhattan totaling $22.5 billion, accounting for 31.9 million-square-feet (msf). In this time, we’ve uncovered some key trends in our market:

1. Reduction in Leasable Office Inventory: A total of 23.2 msf of Manhattan office inventory is being removed from the market for future conversions or user sales, reflecting a significant shift in the city’s commercial real estate landscape. As demand for traditional office space evolves, these properties are being repurposed to meet changing needs. As a result, the overall leasable office stock is projected to decrease by 4.5%, from 512 msf to 489 msf.
2. Surge in End User Purchases: Post-pandemic, 28% of office sales were to end users—an indication of a broader shift in office ownership. End users are capitalizing on recalibrated pricing and taking advantage of properties with high vacancy, opting to own and tailor spaces to their needs rather than navigate fluctuating rents. Notable buyers include Google, Bloomberg, Prada, and Hyundai.
3. Rise of Office-to-Residential Conversions: In response to high office vacancy, investors are increasingly exploring alternative uses for buildings. New tax incentives (notably 467-M) and zoning changes (such as New York City’s City of Yes initiative) have made conversions more viable. The share of square footage in office sales designated for residential conversion has grown steadily—from 35% in 2023 to 44% in 2024, and 52% so far in 2025. Over the past five years, conversions accounted for 13.4% of total office sales but represented 27.3% of the square footage sold, totaling 8.7 msf.

I see these trends as positive for the office market. Conversions are adding much-needed housing at a time when NYC’s residential vacancy rate is below 2%. Meanwhile, end users are showing long-term confidence by establishing a permanent presence in NYC, while simultaneously removing rentable office stock from supply.

Finally, it’s important to highlight the rebound in the office leasing market—another bright spot that underscores the sector’s resilience. Avison Young reports that Q1 2025 leasing activity in the Manhattan office market reached 10.1 msf, the strongest first-quarter performance since 2018. The overall availability rate dropped to 17.3%, the lowest since 2020. Trophy properties led the way, accounting for 61.6% of total leasing activity—a decades-long high.

All of this bodes well for the office sales market. While private buyers have remained the most active (comprising 61.8% of sales since 2020), these positive trends may encourage institutional investors to re-engage. With any luck, capital flows—especially in the CMBS markets—will follow.