Manhattan's Class B and C office buildings took about 7 million square feet of new leasing in the first half of 2026. That is their best half since before the pandemic. Class A went the other way over the same six months, sliding from 11.6 million square feet to 10.3 million. Owners who spoke to Commercial Observer in September all explained it the same way. A Class B building now has to offer the amenities that used to sit only in Class A.
So owners are adding roof decks, conference floors and lounges to buildings that were not designed for them. Every one of those spaces needs someone to run it every day. That makes a roof deck a maintenance decision as much as a design one. Build the space your team can keep clean and staffed, even if that means a smaller one than the budget allows.
The labels themselves have drifted. CoStar counts one, two and three star buildings as Class B and C. That share of new Manhattan leasing ran at 39 percent before the pandemic. It fell to 31 percent last year, and it is back to roughly 40 percent now. Asking what is a class b building in 2026 gets you a description of the bottom of Class A ten years ago. The top of the market pulled the whole scale up after 2020. The bar moved while the buildings stayed where they were.
Rent is doing most of the rest of the work. Cushman & Wakefield put second quarter asking rents for Midtown Class A at $88.50 a square foot, and Midtown South Class A around $104.50. Kaufman Organization prices space at 450 Seventh Avenue between $60 and $70. So it competes head on with Penn District towers asking $130 to $150. A tenant priced out of the new towers lands in a building charging half the rent. And they arrive wanting most of what the pricier building gave them.
That inherited standard is the part owners tend to miss, because it is about service rather than square footage. A tenant who toured a Penn District lobby remembers how the space was kept far more clearly than how it was drawn. The Class B owner signs that tenant at $65 a foot and takes on a standard set at $140. And the same engineers have to meet it, stretched thin across systems the building has had since it opened.
Empire State Realty Trust built a 130 person conference center at 1400 Broadway and put a 250 person lounge on the roof of 1333 Broadway. Both spaces arrived with a permit calendar attached. New York City requires a Place of Assembly Certificate of Operation wherever 75 or more people gather indoors, or 200 outdoors. That covers social and recreational use, and any room where people eat or drink. The Department of Buildings inspects the space and issues the certificate for one year. The Fire Department then issues its own permit on top of it. And the FDNY permit renews on the results of an annual inspection.
So the lounge that looked like a leasing feature on the rendering shows up in operations as a recurring inspection date. And the inspection is the smallest part of what it brings. A warming kitchen and a bar add hood cleaning and grease traps. Caterers need current certificates of insurance, or COIs, before they roll a cart through the loading dock. Then someone resets the room between a Tuesday lunch and a Wednesday all hands. That same person runs the after hours HVAC and replaces the outdoor furniture weather ruins. Guests who turn up without badges get cleared through building access control. All of it lands on a team that already had a full building to run.
Kaufman put an amenity center in the lower level of 875 Sixth Avenue at a cost of around $300 a square foot. Numbers like that get reported, because they sit in a capital request someone had to sign. Annual run rates stay private. No public figure exists for what it costs to run a 10,000 square foot floor like that for a year. So each owner pricing one closes that gap alone. Whatever it turns out to be, it lands in common area maintenance, or CAM, beside the rest of the commercial building maintenance spend. And it comes back to tenants on a CAM statement they read line by line.
Feil runs roughly 15 Class B buildings in Midtown and Midtown South. At 261 Fifth Avenue, a single tenant held exclusive rights to the roof deck for years. The deck opened to anybody else only because that tenant moved into larger space elsewhere in the portfolio. Feil is now building a 14,000 square foot deck at 7 Penn Plaza and calls it the company's first large scale amenity. Exclusive rights are what a landlord hands over when there is no fair way to share a space, so the tenant who holds them ends up with a private terrace while everyone else in the building gets a locked door.
Sharing it takes a booking system, also called resource reservation. It shows who holds the room, caps how long they keep it, and releases a slot nobody turns up for. Without one the space goes to whichever tenant asks the property manager first, and the property manager becomes the booking system. That matters for maintenance as much as for fairness. A booked space generates a cleaning turn, an HVAC run and a guest list. And none of it reaches the engineering team unless the booking and the work order live in the same place.
Those same booking records are the only proof the money worked. If half a dozen tenants book a meeting floor every month, bring those numbers to the renewal option talks. If one tenant books it once a quarter, change what the space is for while changing it is still cheap.
Adams & Company owns 21 Manhattan buildings and runs leasing and management for 18 more. That is roughly 7.5 million square feet, at about 2 percent vacancy. Jeff Buslik, an executive managing director there, told Commercial Observer that little has changed in how the firm runs its New York buildings. Tenants sign, he says, because the buildings themselves are "so well cared for" that they work like amenities. Adams has had a conference center since before COVID and otherwise sat out the race.
Two percent vacancy is a strong number for Manhattan office, and it belongs to a firm that spent the decade competing on daily upkeep rather than on new square footage. Buslik's read is that owners installing Class A features into Class B buildings are usually closing a gap somewhere else in the property. A new amenity can hide a maintenance problem for a while. Tenants find it anyway.
Brian Soto, who runs acquisitions and asset management at Time Equities, reads it differently. He has watched tenants weigh one of his Class B buildings against newer, amenity heavy space. Some of them decide the extras are worth paying for. Time Equities added a fitness center, a wellness room and a roof deck at 55 Fifth Avenue anyway. Soto's own read is that amenities help without deciding much. An amenity can help win a tenant who was already close to signing. Tenants who stay through a second renewal stay because the building is run well.
Michael Cohen at Williams Equities won't put a fitness center in his Midtown South buildings. His tenants can join better health clubs within a few blocks. A bike room is different, since nobody rents one from the neighborhood. So the first test on any amenity is whether the blocks around the building already do it better.
The second test runs on the operating side, and it belongs in the talk before the budget gets signed, because an amenity floor joins the office building maintenance plan the day it opens rather than the day it fills up. Which vendor holds the hood cleaning contract, and where does that COI live when it expires in March? What does a Thursday evening event cost in after hours HVAC, and who bills it back? Answering those two turns a build estimate into an operating budget.
The floor holds up when its bookings, work orders, vendor paperwork and inspection dates live in one record with the rest of the building. That is what Cove is built to do. Building operations and tenant experience run on one platform. So a tenant books the conference room in the same app they use to report a cold office. The cleaning turn lands as a tracked work order, and the caterer's COI carries an expiry date someone gets warned about. The property manager sees all of it beside the preventive maintenance schedule for the rest of the asset. Office owners are adding amenities to buildings never designed to carry them. One record is how the roof deck keeps paying for itself.
Tenants want outdoor space and shared meeting space, in that order. Owners and brokers across Midtown and Midtown South told Commercial Observer what they hear. Terraces, roof decks and town hall style rooms lead the list. Demand for in building fitness centers has cooled, because employees can join better gyms nearby. Bike rooms are the exception on the fitness side, since a building can offer something the neighborhood can't.
No one publishes a reliable industry figure, so you'll have to build the number yourself. Construction costs do get reported, and Kaufman Organization spent roughly $300 a square foot on its amenity center at 875 Sixth Avenue. For the annual cost, count cleaning turns, after hours HVAC, and hood and grease service. Add furniture replacement, permit and inspection fees, and the staff hours to coordinate it. Price those before you approve the build, because they land in CAM and your tenants will see them.
In New York City you do, once the space holds 200 or more people outdoors or 75 or more indoors. The Department of Buildings issues a Place of Assembly Certificate of Operation good for one year. The Fire Department then issues a separate annual permit, renewed on the results of its own inspection. Other cities set their own thresholds, so check your local assembly occupancy rules before you publish an event calendar for the space.
Often it isn't. Owners of buildings under about 200,000 square feet struggle to give up 10,000 to 15,000 rentable square feet for a lounge. GFP Real Estate offers tenants half price preschool tuition and stadium suite tickets instead of building lounges it can't fit. Look for what you can offer using floor area you weren't renting anyway. A bike room, a reclaimed setback, or an undervalued second floor near the lobby all qualify.
Yes, because every booking creates work. Put the amenity floor into the same work order management queue as the rest of the building. A booking on a conference floor produces a cleaning turn and an after hours HVAC run. It usually adds an access request for guests and a vendor COI to verify. When bookings live in one tool and maintenance in another, someone matches the two calendars by hand every week.
Sources: Commercial Observer, "For Manhattan Class B Office, the Days of Optional Amenities Are Past," September 8, 2026; New York City Department of Buildings, Place of Assembly Certificate of Operation; CoStar first half 2026 Manhattan office leasing data and the Cushman & Wakefield second quarter 2026 Manhattan report, both as reported by Commercial Observer.