KKR is the latest firm to bail on office plans as the sector continues to be shaped by remote work.
The private equity giant was looking at 300,000 square feet at Tishman Speyer’s 341 Ninth Avenue in West Chelsea Insider reported. The firm was considering the space near its Hudson Yards headquarters for possible consolidation of its other Manhattan office spaces, but has since scrapped its plans.
“Fair to say we have paused our review of that space and are not moving forward at this point,” a person at KKR told the outlet.
KKR occupies several offices in the city, leasing space at 10 Hudson Yards and 4 World Trade Center. The company also occupies space at 30 Hudson Yards, the New York headquarters for the firm.
Despite being initially in favor of enforcing employees’ return to the office, the company has joined the ranks of large firms to reconsider their office footprints.
In addition to lasting remote work policies, downsizing spurred by economic uncertainty has pushed major companies to sublet spaces or pause new developments. Tech firms are aiming to sublet a whopping 30 million square feet across the country, according to recent CBRE data, an increase from 9.5 million square feet in the fourth quarter of 2019.
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Rideshare company Lyft started looking to cut its office space in half over the summer, subletting 615,000 square feet across four markets. Social media giant Meta recently bailed on plans to occupy 589,000 square feet in Austin. Meta and Amazon have also recently pulled back on expansion plans in New York City.
CoStar put the amount of sublease space available across the country at a record 212 million square feet.
The phenomenon can be seen in deals across Manhattan. Tishman Speyer agreed to acquire the leasehold of the upper floors at 341 Ninth Avenue, occupied by one of the largest U.S. Postal Service processing centers in the nation. The developer set out to convert 600,000 square feet across six floors into office space.
In the fourth quarter of 2020, Tokyo-based public relations and advertising company Dentsu made the biggest dent in the sublease market for the period, seeking to sublease all 324,000 square feet it occupied at 341 Ninth Avenue.
Tishman Speyer did not immediately return The Real Deal’s request for comment.
— Holden Walter-Warner