High-Priced NYC Office Leases Give “Pulse” to Ailing Market

The “flight to quality” continued in the Manhattan office market last year as tenants inked a large number of leases for $100 per square foot or more.

That premium space fared better than the rest of the market, according to two separate reports. The number of $200 per square foot deals also remained high.

“There’s still a flight to quality, and it’s become such a big portion of overall leasing that gets done in a given year,” said JLL’s Cynthia Wasserberger, who wrote one of the reports. “It’s meaningful, and it’s definitely giving a pulse to the market in an otherwise sleepy lease year.”

Tenants signed a record 192 leases for at least $100 per square foot last year, according to JLL’s recap. That was a record number of new leases at the price point, edging out the 190 recorded in 2022.

A similar CBRE report logged 128 triple-digit transactions, down from 142 the year before.

“It shows you the best buildings and the best tenants are willing to pay a lot of rent,” said CBRE’s Howard Fiddle. “It’s another data point that the office is still alive and doing well in certain areas. It’s not all doom and gloom out there.”

Triple-digit deals made up 26 percent of overall leasing, according to JLL, despite a slow year overall for the sector. Total leasing activity finished 6 percent below 2022.

Both reports agree that financial services drove the demand for high-end office space, accounting for about three-quarters of $100-plus per square foot leases. Employers in finance and other sectors are betting that higher-end space will lure people back to the office, Fiddle said.

“It’s largely financial,” he said. “And financial these days is the hedge fund, the money manager, the private equity, the midsize financials. Those users are doing really well, their business is strong and they all want the best space, and rent per square foot is not a huge cost relative to labor.”

SL Green’s One Vanderbilt scored the highest rent of the year with a $247 per square foot lease to AIMCO, and RFR’s Seagram Building had 12 triple-digit deals, the most of any office building, according to JLL.