The Real Deal New York

The great (office) debate

Some brokers hear renewed optimism, while others see too much space on market

January 01, 2017
By Adam Pincus

handful of office tenants with leases likely to be signed in 2017 are hunting for space with more optimism in the new year, some brokers say.

Several banks and other financial services firms are spurred on by an anticipation of looser regulatory standards during Donald Trump’s presidential term, while a growing crop of tech firms continue to expand their New York City footprints. Yet other tenant representatives say ongoing industry dynamics will keep leasing activity muted.

Some of the largest tenants expected to ink new lease deals in the first quarter of 2017 include HSBC, which is seeking as much as 800,000 square feet; Spotify, which is on the hunt for about 400,000 square feet; and the New York State attorney general’s office, which is looking for as much as 350,000 square feet.

Other big organizations that could sign on the dotted line in the new year include Deutsche Bank TRData LogoTINY, which is seeking up to 1 million square feet; Touro College, which is looking for at least 250,000 square feet; and the New York City Economic Development Corporation, which is hunting for the same amount.

The Real Deal tapped industry sources and news reports to determine some of the largest firms likely to close a deal in 2017.

Peter Riguardi, broker and president of the tri-state region for JLL, said tenants have been anticipating an improved market this year — even if regulatory changes or new legislation need more time to take effect.

“What if companies start bringing back jobs from overseas?” said Riguardi, who is representing Spotify and HSBC, as well as other companies across various industries. “We are seeing a lot of optimism around big business and small business. They feel a change and an opportunity to grow and add jobs. People and companies are talking that way.”

Banks and other lenders are eyeing space with more intensity, said Bradley Gerla, a broker at CBRE. With several big financial firms back in the market and regulations expected “to ease up a little bit,” overall leasing activity is likely to gain steam, he noted.

A number of growing tech firms are also actively hunting for space.

“The fact that Spotify — which hardly existed a few years ago — is in the market for 400,000 square feet is pretty amazing,” Gerla said. “And Facebook and Google have kind of made New York their headquarters. They will have an appetite for additional space.”

But others see a more turbulent year ahead in NYC office leasing, with a glut of new inventory on the market.

“For 2017, irrespective of what Trump [does], my basic view is the tide is going out,” said Joseph Thanhauser, a broker and chairman at the Manhattan-based tenant-representative firm Byrnam Wood. “There is a lot of new space.”

Thanhauser noted the long-term trend is that tenants are shrinking their footprints, and said he expects that to continue this year. In turn, those companies should expect several windfall opportunities in their pursuit of new digs. His inbox, he added, is being inundated with “price reduced” offers.

“The object is not to move now, but to be ready to seize the opportunity when it comes. They get it that things are coming their way,” Thanhauser said.