Last fall, JPMorgan Chase’s 2.5 million-square-foot trophy Foster & Partners-designed tower opened at 270 Park Avenue. Six months later, the city’s first all-electric tower, also known as Jamie Dimond’s Man Cave, is still inspiring fresh and innovative deals.
That’s because executives recognize that having a technologically up-to-date and healthy workspace is good for recruitment, retention, bragging rights, and revenue.
The largest new tower currently under construction is 175 Park Avenue, next to Grand Central Terminal. The 95-story (1,519-foot), 3.02 million-square-foot building will house a Hyatt hotel on floors 83 through 90 (the top five floors are mechanical).
The company is still looking for an office anchor for the site, but developers RXR and TF Cornerstone are counting on the design by Skidmore Owings Merrill (who also worked on 1WTC and 7WTC) to attract top tenants.
But building the next hit office tower will take time, with the first batch of new skyscrapers not starting construction until late 2028.
That’s why there was a significant increase in renewals in the first quarter of this year, said Jonathan Mazur, head of research at Newmark. Overall, 46.2% of leases were renewals, extensions, or expansions. But if you zoom in on tenants leasing 100,000 square feet or more, that number jumps to 80%. Of the 5.8 million square feet leased this year, nearly 4.7 million square feet were in Class A trophy space.
“Reinvented properties accounted for almost 82%,” added Bruce Mosler of brokerage Cushman & Wakefield. “Large leases of over 100,000 square feet continue to drive demand.”
Among the major renovations was the blockbuster acquisition of Bryant Park No. 1 by Bank of America.
It’s hard to believe that this attractive, angular, white glass tower, developed by the Durst organization, is 20 years old. The new deal, negotiated by CBRE’s Bob Alexander with the financial institutions, gives BofA an additional 20-year contract, but this time it will be responsible for the entire 2.4 million square feet of tower and retail space.
Another move is American Express. After two stressful years negotiating a complex deal, the company assumed Larry Silverstein’s lease with the Port Authority for the land where the new Second World Trade Center will be built. The final missing 16-acre portion of the WTC will finally be completed in 2031 by Mr. Silverstein, who will soon be 95 years old.
The land lease agreement with the Port Authority for the 55-story, nearly 2 million square foot building includes both a purchase option and a renewal option to extend the agreement for a full 99 years, making it a major, long-term commitment to the city by the global financial company.
Silverstein has enough offers to fill 800,000 square feet at 7 WTC, with asking rents of $120 to $140 per foot — ironically, since tenant Moody’s will move into the lower portion of Brookfield’s 200 Vesey Street, directly below American Express’ current offices.
With all the deals, Manhattan’s trophy vacancy rate has dropped significantly, to 3.4%, according to Newmark statistics. For businesses looking for new, updated properties, finding affordable space can be difficult. Asking rents have soared from $150 per foot to a whopping $400 per foot. That’s what Related is looking for in prime space at the 52-story 625 Madison it plans to build.
“The most important thing is that rents are going up across the board,” Mosler said. “Employment notices have been maintained and free rent has remained stable, but rents are rising.”
Jay Neveroff, a partner at law firm HSF Kramer, agreed: “Office rents are at an all-time high. Some rents are unimaginable, but that’s for incredible space.”
Recent deals for 9 W. 57 St. and One Vanderbilt have both closed for more than $300 per foot. “that [higher rent] “There’s a ripple effect, but it’s still building by building. Older buildings with low ceilings and unrenovated buildings don’t get that kind of rent,” Neveroff said.
Mazur said demand for space is coming from high-tech tenants, artificial intelligence adjusters and financial companies, while requirements for law firms are at the highest level in more than a decade.
After merging with Schulte Roth to become McDermott Will & Schulte at 919 Third Ave., the law firm is now crunched for space at the packed One Vanderbilt.
The integrated law firm is in negotiations with BXP for six floors of the 46-story building in progress at 343 Madison Ave., and has already signed a contract with CV Star for 275,000 square feet on the base of the 930,000-square-foot site.
The floors of the electrified, hospitality-oriented building, designed by Kohn Pedersen Fox (KPF), will begin handing over to tenants in 2029.
Another law firm, Simpson Thatcher, is negotiating a lease with Ikea as the other investor and retail tenant as the anchor for Gary Barnett’s proposed 1.6 million square foot tower at 570 Fifth Avenue, with room at the top for an additional 350,000 square feet of businesses.
Asking rents for this KPF-designed tower range from approximately $225 to $290 per foot.
At Hudson Yards, Related & Oxford Properties’ 1.4 million square foot 70 Hudson Yards is already rising from the ground as future tenant Deloitte relocates from Rockefeller Center. The all-electric, net-zero carbon building was designed by Roger Ferris + Partners and Gensler, with ground floor amenities designed by INC.
It will have unobstructed views of the Hudson River and extensive outdoor space with tenants beginning construction in late 2028.
The 500,000 square foot top area is being marketed as a build-in opportunity with its own private terrace, West 35th Street lobby, amenity floor and even river-to-river views.
Rent ranges from $250 to more than $300 per foot.
There’s also the top of the 1.8 million square foot Citadel Tower. Developed by Citadel, Vornado and Rudin and designed by Foster + Partners, the building will reach a height of 1,600 feet at 350 Park Avenue. The asking rent is $285 per foot and the target opening date is 2032.
Completion of the remaining towers may be several years away, but tenants whose terms expire in the 2030s are already considering their options.
Let’s take a look at Société Générale. The lease at 245 Park Avenue expires in 2032, but the company is already moving toward a 500,000-square-foot slot at 15 Penn in Vornado. RXR’s 175 park. or BXP and Moinian’s 3 Hudson Blvd.
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