By Natalie Johnson

New York City’s commercial real estate market sent a signal in 2025 that most observers have not fully absorbed. Leasing velocity hit 40.5 million square feet, among the highest annual totals on record, and 80% of it was relocations. Only 20% were renewals, approaching the historic low set in 2018 when the market was nearing its pre-pandemic peak. That ratio is a declaration of confidence.

Charles P. Laginestra, a Senior Vice President at CBRE who has steered some of New York City’s largest office relocations, reads those numbers with the precision of someone who has watched sentiment cycles drive deal volume for decades. “Simply put,” Laginestra states, “companies are betting on New York.”

Flight to Quality Is the Headline. The Real Story Is Deeper

The easy explanation for the surge in corporate relocations is flight to quality, companies upgrading to modern, better-positioned spaces. That is mostly true. But Laginestra frames the underlying dynamic with greater precision. When business sentiment is high and companies are confident about their own trajectory, they stop avoiding large capital outlays and start investing in the spaces where their people work. Renewals are the default when uncertainty dominates. Relocations are the choice when leadership is betting on the next chapter.

What gets missed in that calculus is the psychology of the tenant living with the alternative. Most real estate professionals assume that renewals are less painful, less disruptive, less expensive, and less complex than relocations. Laginestra pushes back. Occupying an outdated space every day, or enduring the strain of a restack that never quite resolves, carries its own cost not in square footage or lease economics but in the organizational experience of the people doing the work. A well-executed relocation is not a disruption. It is a fresh start, an opportunity to reshape corporate culture beginning with the physical environment itself.

NYC Is a Wave Pool. Permanence Is an Illusion

The absorption of millions of square feet in submarkets like the Penn District has prompted predictable questions about whether Midtown’s center of gravity is permanently shifting. Laginestra dismisses the premise. When Hudson Yards first launched, the prevailing narrative was that it signaled the death of Midtown East. Park Avenue has since become one of the tightest submarkets in the country. “New York City is a wave pool,” he reflects, “and the momentum is constantly shifting between submarkets and among industries.”

That perspective shapes how Laginestra thinks about which neighborhoods are positioned for the next leasing cycle. His read is that both Midtown core and Downtown are well-placed to capture the next wave. Landlords in both areas are actively investing in their assets. Supply has tightened in other submarkets, pushing tenants toward Downtown and pulling institutional players back toward Midtown proper. The specific answer to which building wins is always context-dependent. No one has a crystal ball, but the structural conditions in both neighborhoods favor sustained leasing activity.

For landlords watching a marquee tenant consider a move, the first and most important step is not a retention pitch. It is an honest assessment of market dynamics, whether conditions favor the landlord or the tenant, where the supply-and-demand ratio sits, and whether the asset itself requires investment to avoid becoming a commodity. Those answers determine everything that follows. How to approach the tenant, how to invest in the building, and how aggressively to pursue alternatives if the tenant ultimately leaves.

The 2025 numbers suggest that for New York City’s commercial real estate market, the next decade looks considerably more like 2018 and 2019 than the years that followed. Companies do not relocate when they are afraid. They relocate when they are building. Right now, the evidence suggests they are building for the long term.

Follow Charles P. Laginestra on LinkedIn for more insights on NYC commercial real estate, corporate relocation strategy, and the market dynamics shaping Manhattan’s next leasing cycle.