Hedge fund weakness weighing on Midtown office market

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

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
Leon Black and Debra Black with the townhouse (Getty, Beauchamp Estates)
Former Apollo CEO Leon Black buys $28M London townhouse
Former Apollo CEO Leon Black buys $28M London townhouse
Workers at 750 Third Avenue will soon be able to get medical check-ups at the office. (Google)
Landlords’ next amenity: Office building health care
Landlords’ next amenity: Office building health care
Silverstein leashes BarkBox for 52K sf at 120 Broadway
Silverstein leashes Bark for 52K sf at 120 Broadway
Silverstein leashes Bark for 52K sf at 120 Broadway
Chubb CEO Evan Greenberg, Olayan Group's Suliman Olayan and 550 Madison Avenue (Getty, Olayan, Wikimedia)
First tenant at Olayan Group’s 550 Madison takes 240K sf
First tenant at Olayan Group’s 550 Madison takes 240K sf
Larry Silverstein, 3 World Trade Center and Index Exchange CEO Andrew Casale (Getty, Silverstein, Index Exchange)
Casper signs subtenant for 43K sf at Silverstein’s 3 World Trade
Casper signs subtenant for 43K sf at Silverstein’s 3 World Trade
55 East 52nd Street and Kenneth Fisher (Court Square, Fisher Brothers)
What the financial titans pay at Fisher Brothers’ Park Avenue Plaza
What the financial titans pay at Fisher Brothers’ Park Avenue Plaza
Minskoff’s 1166 Sixth inks 120K sf in leases
Minskoff’s 1166 Sixth inks 120K sf in leases
Minskoff’s 1166 Sixth inks 120K sf in leases
Renderings of 2 Penn with Vornado CEO Steven Roth and MSG Entertainment CEO James Dolan (Vornado, Getty)
MSG Entertainment re-ups at Vornado’s 2 Penn for 428K sf
MSG Entertainment re-ups at Vornado’s 2 Penn for 428K sf
arrow_forward_ios

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

Loading...