The dam is finally about to burst on Manhattan’s stagnant office rental market, with landlords and brokers ready to uncork the champagne after one of the weakest years on record.
At least 12 large deals of up to 250,000 square feet each are nearing completion, likely by the end of the year, people told the Post.
Some of the new contracts have already been “terminated.” This means that a contract has been created and is waiting for either side to approve it. Others engage in preliminary consultations and “trading papers.”
While commercial real estate’s woes are well-documented, the deal could lead to even larger transactions (up to 1 million square feet each) in 2024, the people said.
Currently, the occupancy rate in Manhattan as a whole is hovering around 20%.
All but one of the towers are older towers that have been expensively upgraded, reflecting the so-called “flight to quality.”
“There is no space left in brand new buildings like 1 Vanderbilt or Manhattan West, so naturally it will be built in older buildings that have been redeveloped,” one person said.
It’s common for big deals to be finalized before January 1st in any given year, in part for tax considerations and, in the words of one veteran player, for “landlords, brokers, It’s also about allowing accountants and lawyers to get out of Dodge. It’s winter vacation time. ”
The most attractive situation is the repositioned, amenity-rich 22 Vanderbilt, where owner Milstein recently brought on Brookfield to assist with leasing and marketing.
The tower recently signed a deal with public relations firm Joelle Frank to lease 68 percent of the 1.19 million square foot site.
Officials said advanced negotiations are currently underway to acquire 250,000 square feet of land with Bain & Company and 100,000 square feet of land with TD Bank, located next door at 1 Vanderbilt on SL Green. It will expand from TD’s 200,000 square feet.
A representative for the building said: “There is nothing to report here. The lease has not expired.”
Another pending 250,000-square-foot deal is George Comfort & Sons’ American Eagle property at 63 Madison Avenue. The retailer’s offices are currently located at 401 Fifth Avenue in Chetrit Group. The second potential lease at 63 Madison is for Baruch College, which is 100,000 square feet. .
A Comfort representative declined to comment. American Eagle’s broker, Mitti Liebersohn of Savills, did not respond to an email seeking comment.
Merchant banking firm BDT & MSD Partners’ lease for 100,000 square feet at 550 Madison Avenue, which was redeveloped by Olayan America, is “virtually certain,” the people said. This would be an expansion into New York, as the company currently only has about 33,000 square feet at 1 Vanderbilt.
The company was formed earlier this year through the merger of Byron Trott’s BDT & Company and MSD Partners, which manages assets for Michael Dell and his family.
A representative for Olayan did not comment. The tower, which a broker recently told us was “on fire in the middle of a terrible market,” was nearly 70% leased prior to the BDT deal.
Further west, law firm Ropes & Gray is in “advanced discussions” to acquire 240,000 square feet of Warner Bros. Discovery sublease space at 30 Hudson Yards for its affiliates. If the deal goes through, the company will leave its approximately 300,000-square-foot space at 1211 Sixth Avenue.
The Sixth Avenue Tower is home to New York Post parent company News Corp. and Fox Corp., and as we reported in January, both companies signed separate lease extensions through 2042. The media company owns nearly 1.2 million square feet in two 2 million square foot towers. -Foottower is owned by pension fund Ivanhoe Cambridge.
Josh Kryloff and Mitchell Arkin of Cushman & Wakefield, the leasing agents for 1211 Sixth, did not respond to requests for comment.
However, several other companies are vying for space at Hudson Yards, including Susquehanna International Group, which is currently located at 140 Broadway.
An even bigger deal could be coming soon. The newspaper’s Lois Weiss reported that Blackstone, American Express and Jane Street Capital are each looking for about 1 million square feet of land.
