The list of office buildings that command triple-digit rents was limited just a few years ago to a handful of exclusive towers mostly in the Plaza District. But that’s not the case anymore.
In submarkets like the Far West Side, Hudson Square and Bryant Park, office tenants inked a recorded 145 leases with starting rents at $100 per square foot or higher last year – a new record.
What’s even more staggering is the fact that these mega-priced deals totaled roughly 8.8 million square feet in 2019, or 30 percent of all the leasing activity in Manhattan for the year, according to a report from JLL.
“It’s not just cocktail party chit-chat anymore. It’s a profound trend,” said JLL’s Cynthia Wasserberger, who authored the report with her colleague Carlee Palmer.
Last year’s 145 $100-or-more deals were an increase over the 131 leases signed in 2018. And they surpassed the record set four years ago of 138 deals signed in 2015.
WarnerMedia’s 1.46 million-square-foot sale-leaseback at Related Companies and Oxford Properties Group’s 30 Hudson Yards topped the list of the largest triple-digit deals. It was followed by Google’s 1.3 million-square-foot lease at the St. John’s Terminal in Hudson Square and Facebook’s 1.2 million-square-foot deal at 50 Hudson Yards.
But while reaching or surpassing $100 per square foot has become something of a trophy mark for Manhattan properties, some caveats come with that benchmark. Most of these deals come with significant concessions that lower the net effective rents these tenants are paying.
“For the kinds of tenants that are going to go and pay that much, they are in turn getting robust concessions,” said Wasserberger, who added that the average size of these pricey deals is growing. “The type of deals that are getting done are for the larger, more sophisticated tenants. It’s not a boutique sector anymore. These are headquarters transactions.”