The Building Spree That Reshaped Manhattan’s Skyline? It’s Over.

The Manhattan office construction boom is over.

Just three large office towers — of more than 500,000 square feet — are being built across New York City, with two expected to open in 2024 or 2025 and nothing else projected to go up for years. Normally, a handful of sites that size would be in various stages of construction, with at least one opening every year since 2018, according to JLL, a real estate services firm.

Nearly 20 large office buildings that developers have proposed, including the final tower near ground zero, have yet to break ground. Many are on indefinite hold as developers face numerous challenges.

Rising construction costs and interest rates have significantly driven up the price to build. Banks are increasingly reluctant to finance such construction while Manhattan has record office vacancies. And there are few large tenants, which lenders require to be lined up before a new office can be built, actively looking to move.

As a result, Manhattan is entering its most significant office construction drought since after the savings and loan crisis in the late 1980s and early ’90s. Developers now concede that the next wave of large office towers may not open until the early 2030s, if not later.

“It’s hard to justify putting a shovel in the ground when you have supply-demand fundamentals that are out of whack,” said James Millon, a president at CBRE, a real estate services firm, who helps developers secure capital.

In a city usually whirling with cranes, the current lull in new office projects signals the end to a quarter-century-long building spree resulting in glass-and-steel towers that reshaped the Manhattan skyline and were filled with growing companies, especially in the technology sector.

The pause stands in contrast to other metropolises, including London, where demand for new office spaces remains relatively robust. Ten buildings were recently approved for construction in London’s financial district, including what would be the area’s tallest.

In New York City, though, officers developers are still reeling from a one-two punch. The initial shock of the pandemic upended corporate work culture, leading many companies to reduce their footprint because of remote work. Then came the aftershock of soaring interest rates — kryptonite for an industry built on debt.

Most consequentially, the lull could be a drag on the city’s budget during a time of financial austerity. Office buildings have an outsize influence in the city: They greatly increase the value of land they sit on and account for one-fifth of all property taxes collected annually by New York City, which is heavily dependent on property taxes to fund basic services.

The cost to build the largest office buildings can easily exceed $3 billion, and they take years to complete, creating thousands of construction jobs along the way. In the years before the pandemic, construction spending in New York City on nonresidential projects, including offices, averaged about $21 billion annually, according to the New York Building Congress, a trade group for construction and real estate companies.

At a ceremony last month celebrating the final steel beam being installed at the new JPMorgan Chase Building, Mayor Eric Adams likened this period to the opening of the Empire State Building during the Great Depression. That building was among the last major offices to open before a pause that lasted two decades.

Since 2000, more than 52 million square feet of offices has opened in Manhattan, according to CBRE. An entire neighborhood rose above rail yards on the west side; the tallest building in the Western Hemisphere — One World Trade Center — sprouted downtown; and skyscrapers soared near Grand Central Terminal.

But it is a very different story today. At the end of November, nearly 18 percent of all office space in Manhattan was available for lease, the highest rate since Colliers, a real estate brokerage firm, started tracking it in 2000. On its own, the available space could fill 27 One World Trade Centers.

Brokers say that a swath of that space is concentrated in older office buildings, built right before and after World War II, that most companies consider outdated.

“One of the biggest problems we’ve had in the city, and it’s as though it is never noticed, is how old the office stock has gotten,” said Mary Ann Tighe, a prominent broker who is the chief executive officer of the New York Tri-State Region of CBRE.

Ms. Tighe said that elected officials, who have become increasingly hostile toward the real estate industry, need to encourage office development. “We have to keep reinvesting, and you have to make it easy for people,” she said.

But State Senator Liz Krueger, a Manhattan Democrat, said the most pressing question about Manhattan’s offices is not when the next one would be built but what will happen to all the empty space, including how to get more workers to return to their desks. “The opposite discussion takes the lead,” she said. “How do we transition surplus office to residential?”

Despite the headwinds, many office developers are still eager to build the next supertall tower. They believe the pandemic has accelerated a so-called flight to quality — companies upgrading to the latest, greatest offices.

They point to the new JPMorgan Chase Building on Park Avenue and One Vanderbilt, the 1,401-foot-tall tower next to Grand Central Terminal that opened in 2020. One Vanderbilt is more than 99 percent leased, with some tenants paying $150 per square foot and more.

“When JPMorgan builds this brand-new headquarters, the competitors of JPMorgan will want to be in that type of space as well,” said Scott Rechler, the chief executive of RXR, a real estate company.

RXR has proposed one of the largest of the office buildings yet to start construction, at 175 Park Avenue, on the site of a Grand Hyatt hotel in Midtown Manhattan. Mr. Rechler hopes to break ground next year, but the tower needs an anchor tenant, a large company that could commit to leasing about a quarter of it, which would be roughly 500,000 square feet.

Another developer, Silverstein Properties, has been searching roughly 15 years for an anchor tenant for 2 World Trade Center in Lower Manhattan. Also waiting is BXP, the real estate investment trust formerly known as Boston Properties, which plans to build a roughly 900,000-square-foot tower on Madison Avenue.

A handful of significantly smaller office buildings in Manhattan, which are mostly between 15 and 25 stories tall, are being built without tenants already lined up. Real estate analysts say those buildings carry far less risk for lenders and do not face the same hurdles as large developments.

When the construction drought ends, the highest rents and revenues any office developer has collected in New York City will follow, according to analysts and brokers.

At the end of November, the average asking rent for Manhattan office spaces was $75 per square foot. With the higher interest rates and increased construction costs, developers would need to charge $200 to $300 per square foot for a future office high-rise to make financial sense, they said.

“There is a handful of trophy buildings in New York that can get those types of rents,” said Mr. Millon at CBRE. “But there’s limited space: You’ll have to knock something down to go back up with it.”