The completed renovation of a prominent Fifth Avenue property has sounded a familiar refrain to many landlords: too much empty office space.
Manhattan closed out the first quarter with a 16.1 percent office vacancy rate, according to JLL data reported by Bloomberg.
The brokerage, which tracks 470 million square feet, found a mere 4.6 million square feet of office space was leased in the first quarter. Average asking rents also declined across office qualities, including trophy offices, Class A offices and Class B offices.
JLL’s data on Manhattan’s office vacancy rate was touted as a record high, but the report adds to a consistently dim picture, following higher vacancy rates. Colliers recorded a 16.9 percent vacancy rate in the fourth quarter and a 17.3 percent rate in the first quarter of 2021.
The recent data highlights space that debuted on the market and kept the vacancy rate high in the first quarter, including the completion of Brookfield Properties’ renovation of 660 Fifth Avenue. The $400 million improvement project brought 1.5 million square feet online.
Some of that space is already being leased. In August, asset manager 400 Capital Management signed a lease for 25,000 square feet and is expected to move in next year. Prior to that, Australian financial services company Macquarie Group became the revamped building’s first tenant, signing a lease for 220,000 square feet.
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One of the biggest leases to come to fruition in the first quarter was Citadel’s master lease of 350 Park Avenue, which was reported in December. Ken Griffin’s firm is leasing 585,000 square feet from Vornado Realty Trust at the property for 10 years, where the initial annual rent will be $36 million.
As remote work continues to take a hold on the office market, tenants are more inclined to move to newer or modernized spaces, leaving landlords of older properties up a creek without a paddle.
— Holden Walter-Warner