Big companies like AmEx are making massive moves in the city's tallest towers. Foster Partners Last fall, JPMorgan Chase’s 2.5 million-square-foot trophy, Foster + Partners-designed tower opened at 270 Park Ave. Six months on, the city’s first all-electric tower, aka Jamie Dimon’s Man Cave, is still inspiring fresh and innovative deals.
That’s because C-suiters now realize that having a technologically modern and healthy workspace is good for recruitment, retention, bragging rights and the bottom line.
The largest new tower now in the works is 175 Park Ave. next to Grand Central Terminal. It will rise 95 stories (1,519 feet) and house 3.02 million square feet, including a Hyatt hotel on floors 83 to 90. (The top five floors are mechanical).
It’s still seeking an office anchor for its base, but it’s developers, RXR and TF Cornerstone, are banking on a design by Skidmore Owings Merrill — which also did 1 WTC and 7 WTC — to attract top tenants.
But constructing the next hit office tower will take time, with the first graduating class of new skyscrapers not opening for build-outs until late-2028.
That’s why there was a significantly higher number of renewals in the first quarter of this year, according to Jonathan Mazur, who heads research for Newmark. Overall, 46.2% of the leases were renewals, extensions and expansions. But zoom in on the tenants leasing 100,000 square feet and up, and that number balloons to 80%. Of the 5.8 million square feet leased this year, almost 4.7 million square feet of that was in Class A trophy space.
“Reinvented properties comprised almost 82%,” added Bruce Mosler of brokerage Cushman & Wakefield. “The large leases over 100,000 square feet are still driving demand.”
Among the big renewals was the blockbuster Bank of America takeover of 1 Bryant Park.
It’s hard to believe the glamorous, angular white glass tower developed by the Durst Organization is a 20-year-old structure. Negotiated for the financial institution by Bob Alexander at CBRE, the new transaction puts BofA into another 20-year deal, but this time it will be responsible for the entire 2.4 million-square-foot tower and retail space.
Another company on the move is American Express. After a stressful two years of negotiating a complex transaction, the company has taken over Larry Silverstein’s lease with the Port Authority for the land that the new 2 World Trade Center will stand on. The last missing piece of the WTC’s 16 acres, it will finally be completed in 2031 by the soon to be 95-year-old Silverstein.
The land lease with Port Authority for the 55-story, nearly 2 million square-foot edifice includes options for both a purchase and a renewal option to extend the deal to for a full 99 years — a major long-term commitment to the city by a global financial company.
Silverstein has enough proposals to fill 800,000 square feet at 7 WTC at asking rents of $120 to $140 per foot — ironically because tenant Moody’s will move to the lower portion of Brookfield’s 200 Vesey St., right under American Express’s current office.
All the dealmaking has taken a big bite out of the Manhattan trophy vacancy rate, dropping it to 3.4%, according to Newmark statistics. It’s tough for any firm desiring new updated quarters to find affordable space, as asking rents soar from $150 per foot to a whopping $400 per foot — what the best spaces in Related’s upcoming 52-story 625 Madison are asking.
“The most significant bullet point is that rents are being driven up across the board,” Mosler observed. “Work letters are holding and free rent is stabilizing but rents are moving up.”
Jay Neveloff, partner at the law firm HSF Kramer, agreed: “Office rents are at an all-time high. There are rents I never thought were imaginable — but it is for amazing space.”
Recent deals at both 9 W. 57 St. and One Vanderbilt have been signed at over $300 a foot. “That [higher rent] is having a ripple effect, but it is still building by building,” Neveloff explained. “Older, unrenovated buildings that have low ceilings won’t command those rents.”
The demand for space is coming from tech tenants, artificial intelligence tweakers and financial firms, while law firm requirements are at their highest level in more than 10 years, Mazur said.
After merging with Schulte Roth at 919 Third Ave. to become McDermott Will & Schulte, the law firm is now space crunched at the very full One Vanderbilt.
That combined law firm is in talks with BXP for six floors at the in-process, 46-story 343 Madison Ave., which has already signed C.V. Starr for 275,000 square feet in the base of the 930,000-square-footer.
Floors in the electric, hospitality-oriented building, designed by Kohn Pedersen Fox (KPF), will begin to be turned over to tenants in 2029.
Another law firm, Simpson Thacher, is still negotiating its lease as the anchor for Gary Barnett’s upcoming 1.6 million-square-foot tower at 570 Fifth Ave. with Ikea as another investor and retail tenant, that will have room for another 350,000 square feet of companies on the top.
Asking rents for this KPF-designed tower are roughly $225 to $290 per foot.
In Hudson Yards, Related and Oxford Properties’ 1.4 million-square-foot 70 Hudson Yards is already coming up from the ground for future tenant Deloitte in its move from Rockefeller Center. The fully electric, net-zero carbon building is designed by Roger Ferris + Partners and Gensler with ground-floor amenities by INC.
It will have unobstructed views of the Hudson River and tons of outdoor space with tenants to start build-outs at the end of 2028.
The top 500,000 square feet is being pitched as a building-in-building opportunity with its own private terraces, lobby on West 35th Street, a floor of amenities and even river-to-river views.
The rent ranges from $250 to more than $300 per foot.
There’s also the top of the 1.8 million-square-foot Citadel tower. Developed by Citadel, Vornado and Rudin and designed by Foster + Partners it will rise to 1,600 feet at 350 Park Ave. Asking rents are $285 a foot and the target opening date is 2032.
The rest of the towers on the drawing board may not be ready until years later, but tenants with expirations in the 2030s are already exploring their options.
Just look at Societe Generale: its lease at 245 Park Ave. expires in 2032, but it’s already kicking the tires for a 500,000-square-foot slot at Vornado’s Penn 15; RXR’s 175 Park; or BXP and Moinian’s 3 Hudson Blvd.
