The Real Deal New York

Trophy office tower rents near pre-recession highs

Rates on the rise as hedge funds, overseas financial firms boost high-end demand

May 05, 2014 02:20PM

Manhattan Trophy Article

Rental rates are on the rise in Manhattan’s trophy office towers

Rental rates in Manhattan’s choicest office buildings are on the rise, with asking rents nearing pre-recession highs from 2007 and 2008.

In so-called “trophy” buildings, designated as those built or renovated significantly since 1985 with a prominent tenant roster or architectural significance, asking rents hit $76.02 per square foot in the first quarter of 2014, according to a spring report from Jones Lang LaSalle cited by the Wall Street Journal. The rate marks a 3.6 percent increase from the same period last year.

Asking rents in Midtown’s trophy office buildings topped $90 per square foot for the first time since 2008, going for $90.49 per square foot — up 6.4 percent from the first quarter of 2013, according to the report. Rates were milder in Downtown but also on the rise, jumping 5.7 percent to $61.24 in the first three months of 2014.

The number of high-dollar deals in these trophy properties was also on the rise, with 81 transactions at rents of $100 per square foot or more, up from 51 in 2012, the Journal reported. Financial services tenants such as hedge funds and foreign-based firms buoyed the high-end demand, Peter Riguardi, president of Jones Lang LaSalle’s New York tri-state operations, told the Journal. [WSJ, 2nd item]Julie Strickland

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