Manhattan Office Leasing Market Set to Rebound with a Flurry of Large Deals
Edited by: TJVNews.com
After facing a sluggish year, the Manhattan office leasing market is on the verge of a significant rebound, with at least a dozen large deals, some as large as 250,000 square feet each, poised to be finalized by the end of the year, as was reported at the end of October in the New York Post. The news comes as a welcome relief for landlords and brokers, marking the potential end of the slowest year on record in the Manhattan office leasing sector, the Post report added.
Several large deals, ranging in size from expansions to contractions, are nearing completion, with some leases already drafted and awaiting signatures, according to the Post report. These deals involve extensively upgraded older towers, showcasing a trend known as the “flight to quality.” The report add that Manhattan’s current overall availability rate is approximately 20%, reflecting the challenges faced by the commercial real estate sector.
The majority of the upcoming leases involve expensively upgraded older buildings, with sources noting that newly constructed towers such as 1 Vanderbilt and Manhattan West have limited available space, as was indicated in the Post report. This trend is indicative of tenants seeking premium, renovated spaces, even in older structures, to meet their evolving needs.
A source told the Post, “Of course they’re going to be at redeveloped older buildings because the brand-new ones, like 1 Vanderbilt and Manhattan West, have no space left.”
The Post also reported that one veteran player said, “so the landlords, brokers, accountants and lawyers can get out of Dodge in time for their winter vacations.”
While the imminent deals are substantial, they may also pave the way for even larger transactions in 2024, with sources suggesting the possibility of leases reaching up to 1 million square feet each, the Post report noted. This optimistic outlook signals a potential turning point for the Manhattan office leasing market.
One particularly promising situation is unfolding at the repositioned 22 Vanderbilt, where advanced talks are reportedly underway with Bain & Co. for a significant 250,000 square feet, the report in the Post said. Additionally, TD Bank is exploring an expansion into 100,000 square feet, augmenting its existing 200,000 square feet at SL Green’s neighboring 1 Vanderbilt, the Post added. The tower recently achieved a leasing milestone with public relations firm Joele Frank occupying 68% of its 1.19 million square feet.
American Eagle is in advanced negotiations for 250,000 square feet at George Comfort & Sons’ 63 Madison Ave, while Baruch College is considering a 100,000 square-foot lease at the same location, according to the Post report.
A 100,000 square-foot lease for merchant banking firm BDT & MSD Partners at Olayan America’s redeveloped 550 Madison Avenue is reportedly close to confirmation, the report suggested. This expansion represents a significant increase from the firm’s current 33,000 square feet at 1 Vanderbilt.
Described as “practically a sure thing,” the expansion signifies a New York footprint boost for the firm, which currently occupies approximately 33,000 square feet at 1 Vanderbilt, the Post report said. The move follows the merger earlier this year between Byron Trott’s BDT & Company and MSD Partners, an investment firm backed by Michael Dell.
Law firm Ropes & Gray is reportedly in “advanced discussions” to secure 240,000 square feet of sublease space at Related Companies’ 30 Hudson Yards. The Post reported that if the deal materializes, the firm will relocate from its current 300,000 square-foot space at 1211 Sixth Ave. The move underscores a strategic shift in office locations within the city.
While Ropes & Gray considers the Hudson Yards space, Susquehanna International Group, currently located at 140 Broadway, is also vying for the coveted spot, as was reported by the Post. The competitive landscape for prime office spaces indicates a demand for well-located and well-appointed offices, even amid the ongoing challenges in the commercial real estate market.
Beyond these imminent transactions, even more substantial deals are on the horizon. Reports suggest that major players like Blackstone, American Express, and Jane Street Capital are actively exploring opportunities for leases of around 1 million square feet each, the Post noted. The potential for such significant deals indicates a shift in sentiment, with companies positioning themselves for future growth and stability.