By: Russ Spencer

The long-struggling East Side District, once battered by pandemic-era vacancies and a stagnant leasing climate, is showing signs of a meaningful turnaround, according to a new report by CBRE cited by The New York Post. The analysis covers a swath of Manhattan real estate spanning 44 office buildings between the FDR Drive and Lexington Avenue, from East 34th Street to East 67th Street — a corridor that has been quietly reshaping itself in recent years.

The Post report noted that CBRE’s findings point to what the firm calls a “significant transformation” in the neighborhood, as the area evolves from a predominantly “office-centric” landscape to a more diversified, mixed-use environment. This shift has been propelled in part by a wave of residential conversions, with at least six buildings — four of them located along Third Avenue — in various stages of redevelopment into apartments.

These conversions, while reducing overall office inventory, have also had the side effect of tightening availability for the space that remains. CBRE’s data shows a marked improvement in market fundamentals, with office availability in the district falling sharply from 25.3% in October 2022 to 18.1% in the first quarter of 2025.

Industry observers told The New York Post that this contraction in available space, coupled with strategic repositioning by landlords, has helped restore confidence among prospective tenants. The renewed optimism has been bolstered by major lease renewals and expansions from marquee names such as Bloomberg LP and law firm Kirkland & Ellis. Both companies’ commitments signal strong confidence in the East Side’s ability to serve high-profile, long-term corporate needs.

“The district has seen some positive momentum due to increasing demand along with actions taken by owners to address oversupply,” CBRE stated in its report. The firm characterized the East Side as “a market primed for future growth,” noting that the convergence of a tighter supply pipeline, targeted building upgrades, and a broader mix of uses is beginning to change the narrative for a part of Manhattan that, until recently, faced steep challenges.

CBRE’s analysis highlights the dual role of conversion projects: on the one hand, they address long-standing oversupply issues in the commercial market; on the other, they diversify the district’s appeal by adding residential energy to an area traditionally dominated by corporate tenants. The report suggests that the influx of new residents could bring more foot traffic, retail vitality, and neighborhood vibrancy, which in turn makes the district more attractive for office tenants seeking dynamic, amenity-rich locations for employees.

The Post report also pointed out that this shift is not without precedent. Other parts of Manhattan, including Lower Manhattan in the wake of the early 2000s downturn, saw significant recoveries spurred by office-to-residential conversions that helped stabilize demand and lay the groundwork for long-term growth. CBRE analysts believe the East Side may now be entering a similar phase of revitalization.

Still, the future trajectory of the district will depend on sustained demand from both office users and new residents, as well as the continued willingness of landlords to invest in modernizing assets. According to the report in The New York Post, many owners in the district have been proactive in repositioning properties — from upgrading building infrastructure to enhancing tenant amenities — in a bid to stay competitive in a city where work patterns and tenant expectations are rapidly evolving.

For now, CBRE’s data paints a far more optimistic picture than in recent years, when the East Side struggled to regain its footing amid sluggish return-to-office trends and tenant downsizing. The notable drop in availability rates, combined with anchor tenant commitments, suggests a market that may be turning a corner. If the current momentum holds, the East Side could once again emerge as a sought-after hub for both work and living in the post-pandemic New York landscape.