For more than a year, the warning has been constant: high taxes, a new left-wing mayor, and remote work would hollow out Manhattan’s office towers and chase businesses south. The latest data tells a different story. New York’s commercial real estate market isn’t collapsing — demand is rising.
Figures from the real estate firm JLL covering the first quarter of 2026 show that office leasing activity and rents in Manhattan are up while the vacancy rate is falling, as corporations keep signing new leases — with AI companies particularly active. That is the opposite of what critics predicted when Zohran Mamdani took office as mayor on a platform of higher taxes and tenant-friendly policies.
The lending market tells the same story. Commercial real estate loan originations jumped 80% year over year in the first quarter of 2026, totaling $455 billion — a sharp resurgence in the financing that fuels building purchases and development. Money does not flow into a market that investors expect to crater.
None of this has silenced the exodus talk. Reports that Apollo Global Management was planning a second headquarters in Florida or Texas revived concerns about businesses fleeing New York over Mamdani’s tax policies. The trend is real over the long run: Wall Street firms have steadily expanded in lower-cost southern states for years. JPMorgan Chase now has more workers in its Dallas office than in New York City, and CEO Jamie Dimon wrote in his annual shareholder letter that the trend will likely continue.
But there is a difference between a slow, multi-year migration of back-office jobs and a sudden flight of capital — and the first-quarter numbers show no sign of the latter. The strength in Manhattan leasing demand and rents continued a trend already in place before Mamdani’s term began, suggesting the market is being driven by economic fundamentals rather than political fear.
The single biggest force lifting the market is artificial intelligence. AI companies, flush with investment and racing to expand, have been among the most aggressive tenants signing new leases in the city. Their appetite for space is helping offset the well-documented pullback in traditional office demand from finance and law firms that embraced hybrid work. In effect, one boom is filling the gap left by another sector’s retreat.
That dynamic matters far beyond landlords. A healthy office market supports the restaurants, shops, transit systems, and construction jobs that depend on workers coming into the city. When towers fill up, the sidewalks below them fill up too, and the tax revenue that funds city services holds steady. A genuine commercial real estate collapse would have ripped a hole in the city’s budget; instead, the sector is providing a cushion.
The political backdrop remains a genuine risk that bears watching. Mamdani’s housing agenda — including proposals that landlords warn could discourage development — and the broader tax debate could still alter the calculus for businesses weighing whether to grow in New York or somewhere cheaper. The Apollo and JPMorgan moves are reminders that companies have options and are willing to use them.
For now, though, the hard numbers undercut the most dire predictions. Leasing activity is rising, vacancies are falling, lenders are writing checks again, and the AI industry is helping drive a new wave of demand for Manhattan office space. Far from emptying out, many of the city’s highest-quality buildings remain in demand as companies compete for premium locations. The exodus may yet come in slow motion over the years ahead. But in the first full quarter of the Mamdani era, Manhattan’s office market is doing something its critics insisted it couldn’t: attracting tenants, supporting higher rents, and strengthening rather than weakening.
JBizNews Desk — New York
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