Manhattan’s office leasing taking a dive
Amid intensifying calls to convert some older Manhattan office buildings to residential — including by the influential Real Estate Board of New York — comes even more grim news about the pandemic-battered market.
It’s scary to think about, but Manhattan’s office-leasing picture is worsening by the month. The large, spirits-lifting deals signed in the spring and summer for AIG, TikTok and Facebook seem a distant memory.
CBRE’s latest activity report found that year-to-date leasing of 11.87 million square feet was down 58 percent over last year. Things took an even darker turn in November, when leasing totaled a mere 482,000 square feet — a staggering 78 percent below the five-year monthly average of 2.16 million square feet.
The pitiably puny numbers broke the record for lowest monthly leasing for the third time this year. “I wouldn’t say it’s free-fall, but it’s a lot worse than just an adjustment,” said a broker who wisely didn’t want to be named. He quickly added, “We’ll recover, but it won’t be overnight.”
Among the CBRE report’s other highlights, if they may be called that:
- Continued negative absorption pushed Manhattan availability to 14.8 percent, compared with 11.1 percent in November 2019.
- Suffering Midtown South and downtown saw November’s five-year monthly average off by 94 and 90 percent, respectively.
- In Midtown, sublease additions to the market drove a decline in asking rents down to $83.07 per square foot, versus $84.16 in October and $87.03 in November 2019. The largest new block of Manhattan sublease space was 206,000 square feet by S&P Global at 55 Water St. downtown.
Not so bleak on Bleecker
There are nuggets of good news even in the worst of times.
There was much scoffing when Brookfield Properties bought seven Bleecker Street storefronts in four buildings between West 10th and West 11th streets for $31 million in 2018. At the time, Bleecker was struggling to recover from a blight of empty stores, including five of the ones Brookfield bought.
The developer tapped its creative team to enliven the block with arts and cultural programming under the name Love, Bleecker. Tenants soon followed. Now six of the shops are filled, and a deal is near for the seventh.
In the latest signed leases, global design shop Arc’teryx launched a boutique with almost 5,000 square feet on two levels at 367 Bleecker St., while modern-jewelry brand Tarin Thomas will soon open its first brick-and-mortar shop at 92 Perry St.
Brookfield’s senior VP for retail leasing called Arc’teryx and Tarin Thomas “exciting, growing brands that will contribute to the ongoing revitalization of this unique retail corridor in a major way.”
Renaissance in Noho
Renaissance Properties is enjoying a leasing mini-spree at its atmospheric Manhattan office buildings. The company, headed by father-and-son owners Ken and Bradley Fishel, has inked 16 new deals so far this year.
At its flagship, 12-story 632 Broadway in Noho, new arrivals will soon include an unidentified fintech firm for 15,323 square feet and tech firm Automattic for 11,500 square feet. The 1897-vintage loft-style property, which is 80 percent leased, is also home to Serengeti Asset Management and Tumblr. Asking rents range from $32 per square foot on low floors and $69 per square foot on higher floors.
The 150,000-square-foot property has a private tenants’ rooftop. It also boasts assets that are appealing to pandemic-era tenants: two lobbies to help control the flow of people, and large, wood-framed windows to let in fresh air.
“These buildings were designed to provide fresh air in a time before air-conditioning,” Bradley Fishel noted. “Buildings of this vintage, unlike modern buildings, create cross-ventilation. The most important thing right now is that tenants feel safe.”
Some 32,000 square feet were also leased at Renaissance’s Midtown properties at 264 W. 40th St. and 62 W. 45th St.
A ‘Trusted’ location
Trusted Media Brands is moving from SL Green’s 750 Third Ave. to the same landlord’s 485 Lexington Ave. The nearly 15,000-square-foot lease is good news for the tenant and for SL Green, but has special meaning for JLL Vice Chairmen Matthew Astrachan and Mitch Konsker. The power brokers have represented Trusted Media Brands for 36 years.
Trusted Media is home to iconic brands, including Reader’s Digest and Taste of Home. It spans multiple digital platforms, such as social media, magazines and books.
The company wanted to stay in the SLG portfolio but was seeing a direct lease rather than a sublet, such as it had at 750 Third. The Lexington Avenue floor moreover boasted a prebuilt unit “that checked a lot of boxes for us,” Trusted Media CFO Dean Durbin said. “In addition, SL Green has changed some maintenance procedures and protocols to address concerns for returning back to the office.”
The landlord was repped by a JLL team that included Paul Glickman and Jonathan Fanuzzi.