New York Market Overview
Office:September office occupancy numbers may represent a new normal. As more companies are settling into a wide range of work policies, from full-time, never or somewhere in between. The pandemic-induced drop in office use is projected to have a devastating effect on the market. The city’s office buildings will fall in value by 28%, or $49 billion.
The stretch along Third Avenue from 42nd Street to 59th Street is becoming a stark example of the downside to the city’s ongoing flight to quality. The city’s office vacancy rate is at 19%, it is 29% on the 17-block corridor, nearly doubling in the last four years.
More space in Midtown was newly leased than became available for the sixth straight month, as was the case for Manhattan as a whole.
If demand continues at the same rate, Midtown is on pace to nearly match 2019 leasing volumes of 15 million square feet.
A little more than 1.3 million square feet of office space was leased in Midtown in August, a decrease from the previous month and slightly lower than in August 2021.
Nearly 50% of workers return to office post-Labor Day. Most commuters are in the office three days a week: 49% of workers returned to their desks. That’s up by 38% from April’s numbers and is expected to surpass 50% by the end of the year, as employers rally their employees back into the office. Most workers, 42%, were coming into the office three days a week, ahead of 12% who returned four days a week and 8% who commuted just once a week.
Sublease availability has been on the rise in the pandemic as companies juggle hybrid work plans. Many companies don’t need the space they previously signed for because they’re only having a limited amount of employees coming into the office on any given day.
Franklin Templeton signed a 15-year, 347,474-square-foot lease at One Madison Avenue and will occupy the entire 11th through 22nd floors
D.E. Shaw will relocate in 2024 to Two Manhattan West, and will occupy about 284,000 square feet. It previously rented 241,000 RSF.
Freshfields Bruckhaus Deringer signed a 15-year lease on 180,000 square feet at 3 World Trade Center, asking rent of about $100 per square foot.
O’Melveny & Myers is moving from 7 Times Square to 1301 Sixth Avenue and is renting 142,000 square feet. The 15-year lease covers floors 17 through 20. The asking rent for the space was $84 per square foot.
Cohen & Steers signed a lease for 161,000 square feet at 1166 Sixth Avenue. The lease is for 15 years and the asking rent was $87 per square foot. The company is moving from 280 Park Avenue, where it occupied 87,000 square feet.
Private equity firm Blue Owl Capital signed a 137,600-square-foot lease at the Seagram Building, 375 Park Avenue.
Triust takes 100K sf at Related’s 50 Hudson Yards and is relocating from 711 Fifth Avenue.
Vista Equity Partners signed a 95,000-square-foot lease at the building.
Yotpo inks 30K sf sublease at Stellar’s One Soho Square. E-commerce marketing platform will move its US headquarters from 400 Lafayette Street.
Dotdash Meredith has 331K sf up for sublease at 225 Liberty Street. The asking rent is just $49 per square foot, Dotdash’s offices at 28 Liberty Street, has 68,000 square feet available and is being offered at $50 per square foot.
Peloton has been looking to sublease 100,000 square feet at Hudson Commons, approximately one third of the company’s footprint at the property. The fitness company is paying $95 per square foot for its 312,000-square-foot office, a lease that runs until 2035.
Lyft is planning on subleasing space at the same Hudson Commons property. is aiming to sublease 44%.
Cohen Brothers is approaching default on CMBS loan at 750 Lexington Avenue. The loan is split between two conduit deals, part of a $130 million package. Cohen Brothers hit 30 days of delinquency, triggering the special servicing move. The loan matures in October 2025. The 750 Lexington Avenue property was 71% leased in 2021. The 31-story property was built in 1986 and spans 382,000 square feet.
Marty Burger CEo of Silverstein Properties says "new normalcy" for offices will be 3-4 days a week at 70-80% occupancy.
Housing Development Corporation is moving to 120 Broadway and will rent 109,000 square feet.
Largest Office Leases of July 2022
|620 8th Avenue
|1120 Avenue of the Americas
|125 West 55th Street
|Katz Media Group
|250 Vesey Street
|Jane Street Capital
|620 12th Avenue
|60 East 42nd Street
|Empire State Realty Trust
|37-18 Northern Boulevard
|Long Island City
|Standard Motor Products
|151 West 42nd Street
|Chicago Trading Company
|825 Seventh Avenue
|Edward J Minskoff Equities, Vornado Realty Trust
|New Alternatives for Children
|757 Third Avenue
Retail:Printemps is to open its first US store at 1 Wall Street and is taking 54,000 sf.
Legacy signed a lease for 8,000 square feet at 1 West 34th Street. Asking rent for the space — 4,000 square feet on the ground and 4,000 on a storage level was $350 a foot. The store will only sell new merchandise.
Six stores opened on Madison Avenue this summer. There are 24 businesses in the pipeline, including hotels, restaurants, galleries and clubs. There are vacant storefronts along Madison Avenue from East 57th Street to East 72nd Street, as the availability rate of 39% was the highest in Manhattan.
Average asking rents across the New York metro area ticked upwards, alongside declining vacancies. Vacancies in March dropped by 30 basis points year over year.