Big tech puts Manhattan office leasing within reach of annual record

Facebook alone accounted for almost 40% of November leasing

TRD New York /
Dec.December 10, 2019 11:45 AM
From left: 50 Hudson Yards, 341 Ninth Avenue, 30 Hudson Yards (background) with Google's Sundar Pichai, Amazon's Jeff Bezos and Facebook's Mark Zuckerberg (Credit: Google Maps and Getty Images)

From left: 50 Hudson Yards, 341 Ninth Avenue, 30 Hudson Yards (background) with Google’s Sundar Pichai, Amazon’s Jeff Bezos and Facebook’s Mark Zuckerberg (Credit: Google Maps and Getty Images)

Manhattan office leasing is closing in on a strong finish to the year, as Facebook’s massive Hudson Yards deal pushed November’s leasing activity to a 5 percent increase year-over-year.

The social media giant’s 1.5 million-square-foot lease across 30, 50 and 55 Hudson Yards accounted for nearly 40 percent of the island’s 3.87 million square feet of office space leased last month, according to the latest market snapshot report from Colliers International.

“We are very close to ending the year on par with the strong year of leasing we saw in 2018,” Colliers senior managing director and Northeast region research lead Franklin Wallach said, noting that last year’s total of nearly 42 million square feet was the most activity the city had seen in 20 years.

“The large tech leases from Facebook, Amazon, Google and so on formed a core of large deals that helped move the needle, much like financial services did in the 1990s,” he said. “But it’s important to note that the majority of the activity has always been driven by the 5,000- to 15,000-square-foot tenants. Two thirds of Manhattan leasing is driven by tenants of that size.”

At the same time, by taking large blocks of above-average-priced space off the market, Facebook’s lease helped bring Manhattan’s average asking rent down a notch to $79.12 per square foot — still a very high figure, historically speaking.

Average asking rent had reached an all-time high of $79.77 at the end of the third quarter, the seventh consecutive quarter of growth, and the current average is still well above mid-2019’s then-record $77.82.

Apart from Facebook, Manhattan’s second-largest new lease went to another TAMI tenant, Japanese digital marketing firm Dentsu Aegis Network, which signed a signed a 15-year, 320,000-square-foot lease to anchor Tishman Speyer’s redevelopment of the upper floors of the Morgan North Post Office building at 341 Ninth Avenue.

While the month’s largest leases were concentrated in Midtown and Midtown South (with Hudson Yards straddling the increasingly blurred border between the two), Downtown saw its availability rate fall to a post-recession low of 10.5 percent despite a relatively slow month of leasing. The submarket’s average asking rent also hit a new record for the fourth month in a row, reaching $64.45 per square foot.

Downtown’s largest deal in November went to Frank Recruitment Group, which will be consolidating its offices into about 35,000 square feet on the entire 10th floor of Jack Resnick & Sons’ 199 Water Street.

With just a few weeks left in the year, it remains to be seen whether 2019 will match or surpass last year’s total, but if Amazon’s recent 335,000-square-foot-lease near Hudson Yards is any indication, the odds of hitting another twenty-year-high seem pretty good.

“December is historically an active month, and the last few weeks of the month are a busy time with so many deals closing before year end,” Colliers executive director Craig Caggiano said. “I think it’ll be interesting to see where we net out, in terms of the whole year, come January.”


Related Articles

arrow_forward_ios
From left: Paramount CEO Albert Behler, 1301 6th Avenue, 712 5th Avenue, 31 West 52nd Street (Getty; Google Maps)

Paramount Group back at work, but tenants waiting until 2021

Paramount Group back at work, but tenants waiting until 2021
The Old Post Office (Google Maps)

Here’s what tenants pay at 601W Cos.’ Old Post Office in Chicago

Here’s what tenants pay at 601W Cos.’ Old Post Office in Chicago
The Manhattan office market’s overall vacancy rate rose to a 24-year high of 13.3% in the third quarter (iStock)

Cushman & Wakefield paints bleak picture for Manhattan office market

Cushman & Wakefield paints bleak picture for Manhattan office market
Centric Brands CEO Jason Rabin and the Empire State Building at 350 Fifth Avenue (Centric; Pixabay)

Centric Brands downsizes at the Empire State Building

Centric Brands downsizes at the Empire State Building
55 Water Street, 399 Park Avenue, and 113-133 West 18th Street in Midtown South have each had tenants put up more than 150,000 sq ft for sublease since the pandemic began. (Google Maps)

Manhattan now has 16M sf of available office sublease space

Manhattan now has 16M sf of available office sublease space
590 Madison Avenue and IBM CEO Arvind Krishna (Google Maps; Getty Images)

Here’s what tenants are paying at the IBM building

Here’s what tenants are paying at the IBM building
Brookfield's Ric Clark with 410 Tenth Avenue (Getty; Google Maps)

Brookfield weighs bid for SL Green’s Hudson Yards building

Brookfield weighs bid for SL Green’s Hudson Yards building
From left: 245 Park Avenue, 420 Fifth Avenue and 1271 Sixth Avenue (Google Maps)

Rockefeller Foundation signs sublease in MLB’s old Park Avenue office

Rockefeller Foundation signs sublease in MLB’s old Park Avenue office
arrow_forward_ios

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

Loading...