Hedge fund weakness weighing on Midtown office market

Funds signed a mere 44 leases at $100 psf or more in Midtown this year

TRD New York /
Nov.November 01, 2016 09:05 AM

Hedge funds, bogged down by weak returns and rising competition from passive funds, aren’t leasing $150-per-square-foot offices like they used to.

Year-to-date, a mere 44 hedge funds signed leases in Midtown Manhattan for $100 per square foot or more, according to JLL TRData LogoTINY. Last year 138 did so. Top asking rents have also been falling – to $137 per square foot from $143 per square foot in April.

Hedge funds only accounted for 10 percent of all newly leased Midtown Class-A office space in 2015, but because they tend to pay higher rents their financial significance is far greater. When Ken Griffin’s hedge fund Citadel leased 200,000 square feet at L&L Holding’s new office development 425 Park Avenue last year, it paid $300 per square foot for the penthouse portion.

Hedge fund returns have trailed the S&P 500 this year, making it harder to justify the hefty fees they charge. Meanwhile, passive funds that merely track indices and charge far lower fees have been growing in popularity. In the third quarter alone, investors withdrew $28 billion from hedge funds. [NYP]Konrad Putzier 

DATA PACKAGES

The Real Deal is making its proprietary research available to the public. Contact us TRData LogoTINY to purchase these packages.
NYC Office Leases Transactions Price
Jan 1st 2011 to Oct 1st 2016 4,000 $500
Jan 1st 2004 to Dec 31st 2010 6,000 $500

Related Articles

arrow_forward_ios
4 Times Square (Google Maps, TikTok)

What happens if Trump banishes TikTok, savior of NYC’s office market?

What happens if Trump banishes TikTok, savior of NYC’s office market?
Major new leases of Q2 2020 included the SEC’s 241,000 sq ft lease at 100 Pearl Street (Downtown), Match Group's 41,000 sq ft lease at 60-74 Gansevoort (Midtown South) and TikTok’s 232,000 sq ft lease at 151 West 42nd Street (Midtown) (Google Maps, BKSK Architects)

Bad to worse: Manhattan office leasing sees slowest quarter since 2009

Bad to worse: Manhattan office leasing sees slowest quarter since 2009
Match Group CEO Shar Dubey with a rendering of 60-74 Gansevoort and (inset) 555 West 18th Street (BKSK Architects, Google Maps)

A Match made in Meatpacking: Tinder, Hinge parent company signs lease on Gansevoort Row

A Match made in Meatpacking: Tinder, Hinge parent company signs lease on Gansevoort Row
1633 Broadway and Paramount CEO Albert Behler (Google Maps, Getty)

TRD Insights: The rents at Paramount Group’s 1633 Broadway

TRD Insights: The rents at Paramount Group’s 1633 Broadway
Isaac Zion

SL Green’s co-CIO leaving firm

SL Green’s co-CIO leaving firm
Michael Shvo, 530 Broadway and 711 Fifth Avenue (Shvo)

TRD Insights: Here’s what tenants are paying at Michael Shvo’s latest office acquisitions

TRD Insights: Here’s what tenants are paying at Michael Shvo’s latest office acquisitions
From left: Port Authority Bus Terminal, Grand Central and Penn Station (Wikipedia, Pixabay, CDC)

TRD Insights: Focus may shift to Manhattan’s 3 transport hubs in post-Covid office market

TRD Insights: Focus may shift to Manhattan’s 3 transport hubs in post-Covid office market
WeWork CEO Sandeep Mathrani (iStock, Getty)

WeWork in talks to offer classroom space for NYC private schools

WeWork in talks to offer classroom space for NYC private schools
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...