Why Manhattan Office Leasing Jumped 20% — What Norway’s $543M Bet and Falling Mortgage Demand Mean for the US CRE Recovery
Manhattan’s office market delivered its strongest month in years. August leasing rose more than 20% from July to 3.7 million square feet and outpaced the 10-year monthly average of 2.72 million square feet, reaching the highest monthly volume since 2019. Momentum continues to concentrate in the newest, best-located assets, where availability is tightening even as older stock struggles to reset. Global capital is also re-engaging at the top of the market. Norway’s $2 trillion sovereign wealth fund agreed to invest roughly $543 million for a 95% stake in a 1 million-square-foot Midtown tower—an explicit signal that price discovery and underwriting confidence are returning for trophy assets. Meanwhile, U.S. mortgage demand slipped after a short run of gains, even as 30-year rates eased to 6.64%, underscoring that rate-sensitive consumer housing activity remains fragile. Taken together, the pop in leasing, selective capital inflows to prime offices, and soft purchase mortgage demand map an uneven recovery. Operating fundamentals for best-in-class offices are healing faster than capital markets volumes and rate-dependent segments. The key question is whether leasing strength and a modest thaw in bidding can carry into year-end amid still-elevated borrowing costs.