Is the “doom loop” in commercial real estate real?

Law firms, city agencies, health care nab Manhattan’s most valuable office leases

Davis Polk, Paul Weiss Nab Largest Office Leases of 2023
450 Lexington Avenue, 1345 Avenue of the Americas, 110 William Street, 280 Park Avenue, and 575 Lexington Avenue (Google Maps, Getty)

UPDATED, January 22, 4:25 p.m.: Is the “doom loop” in commercial real estate real? Are dozens of mid-century office buildings functionally obsolete?  

Maybe. But there were still some pricey leases signed in Manhattan in late 2023. Law firms such as Davis Polk & Wardwell and Paul, Weiss, Rifkind, Wharton & Garrison signed massive leases at Midtown buildings, while city agencies and medical providers also inked big leases, according to data provided by CompStak.

Still, things are bleak. The vacancy rate in Manhattan remained at a record-high of 17.9 percent in the fourth quarter. 

Here are the five most valuable leases in 2023.

  1. Davis Polk & Wardwell | 450 Lexington Avenue | $1.5B* | 710,000 square feet

The white shoe law firm Davis Polk & Wardwell scored the most valuable lease in Manhattan in 2023, signing a 25-year lease for the RXR property. As part of the deal, RXR agreed to provide extensive capital improvements across Davis Polk’s 23 floors. It also planned to add a 30,000-square-foot floor. Other building upgrades include modernization of lobbies, elevators and expansion of the building’s sky lobby with private outdoor terraces.

  1. Paul Weiss, Rifkind, Wharton & Garrison | 1345 Avenue of the Americas | $1.46B | 765,931 square feet

Fisher Brothers signed Paul, Weiss, Rifkind, Wharton & Garrison to a 20-year lease at 1345 Sixth Avenue, marking the largest lease by square footage. Paul Weiss will occupy 18 floors of the office building where annual rents range from the low $80s to high $90s per square foot. 

  1. Department of Citywide Administrative Services | 110 William Street | $641M | 640,744 square feet

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The city has provided relief to landlords while remote work is still the norm. The Department of Citywide Administrative Services inked a 640,744-square-foot lease, for which rents start at the mid $40s. The city took over a major vacancy in the building, saving it from further distress. The owners, Pacific Oak and Savanna, defaulted on a $349 million loan from Invesco in 2022, but restructured it in June 2023. 

  1. PJT Partners | 280 Park Avenue | $546.8M | 270,000 square feet

Investment Bank PJT Partners took over 270,000 square feet at SL Green and Vornado’s 280 Park Avenue. PJT previously subleased 80,000 square feet in the building. It expanded the lease to a 130,000-square-foot direct lease and renewed an existing 140,000-square-foot-space in the property. PJT will occupy six floors.

  1. Weill Cornell Medicine | 575 Lexington Avenue | $470.7M | 216,266 square feet**

Weill Cornell Medicine renewed 200,000 square feet and added another 100,000 square feet at 575 Lexington Avenue. Much of the space will be used for administrative purposes. The rest will be for patient care facilities expected to open by 2025. The leases bring the 35-story, 745,000-square-foot property up to 88 percent leased. 

* Value for the 27,000-square-foot expansion portion of Davis Polk’s deal is estimated, as full details were not available.

** Details for the full 300,000-square-foot Weill Cornell renewal at 575 Lexington Avenue were not available.

Data for this story was provided by CompStak, a leading platform for commercial real estate data. CompStak provides comprehensive lease comps, sales comps, loan data, property information, and analytics to drive actionable insights for industry professionals.

Update: A previous version of this story referred to the leases as the largest. The article has been updated to refer to them more specifically as the most valuable leases of the year.