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If remote work was supposed to be the death of the Manhattan office tower, some of the city’s top developers didn’t get the memo.
For The Real Deal’s December issue, Kathryn Brenzel looked at some of the biggest offices in the pipeline from RXR Realty, Related Companies, Vornado Realty Trust, Tishman Speyer and others — all of whom believe their projects can defy the odds in a changed market.
Stalled office occupancy, sluggish leasing activity, high construction costs and rising interest rates have the pace of office construction well below pre-pandemic levels, but these developers are banking on future demand for premium space. Much of the strategy, like so much else in real estate, comes down to a well-worn adage: location, location, location.
As the map below shows, the largest office projects proposed over the last 12 months are concentrated around major transportation hubs in Midtown, including three that will be a short walk from Grand Central Terminal.
Scott Rechler’s RXR and the Elghanayan family’s TF Cornerstone are planning one of the city’s tallest buildings right next to the terminal at 175 Park Avenue, on the current site of the Hyatt Grand Central hotel. The nearly 1,600-foot-tall tower will contain more than 2 million square feet of offices, plus as many as 500 hotel rooms. The partners hope to demolish the existing hotel next year, and the redevelopment is expected to be completed by the end of the decade.
A rendering of 175 Park Avenue (Courtesy of Skidmore, Owings & Merrill)
A short distance away is 343 Madison Avenue, where Boston Properties won the rights to demolish the MTA’s former headquarters and replace it with an office tower. The 982,000-square-foot building, designed by Kohn Pedersen Fox, is expected to generate upwards of $1 billion in revenue for the MTA over the course of its 99-year ground lease on the property.
Just a few blocks north, Rudin Management filed plans in July for a 342,000-square-foot office tower at 415 Madison Avenue. The 40-story building will replace a 24-story one that Rudin completed in 1955.
On the West Side of Manhattan, two more large office buildings are in the works within the triangle formed by Penn Station, the Port Authority and Hudson Yards.
Stephen Ross’ Related Companies is planning a 1.3 million-square-foot building at 514 West 36th Street — directly across the street from 66 Hudson Boulevard, where Tishman Speyer is putting the finishing touches on its 65-story office tower, the Spiral.
Related purchased the 36th Street property from former Governor Eliot Spitzer in 2018 for $96 million. A few blocks south, Related recently wrapped up work on three million square feet of office space at 50 Hudson Yards, locking up tenants including BlackRock, Meta, Vista Equity Partners and Truist Financial.
Like Related, Tishman is not resting on its laurels. Two blocks north of the Spiral, the firm plans a 1.3 million-square-foot office tower at 99 Hudson Boulevard, or 11th Avenue and West 36th Street.