Just weeks into the second quarter, brokers are already saying that caution continues to linger in the city’s leasing market.
After one of the slowest quarter in years during the first three months of the year, a number of large transactions that have been
rumored to be in talks for months remain in negotiations and big tenants who do have to lease space have made decisions that reflect a
sense of conservatism.
In recent weeks for instance, the law firm Chadbourne Parke is said to have turned its attention from One World Trade Center to a roughly 250,000-square-foot deal at 230 Park Avenue. The firm, which is located at 30 Rockefeller Plaza is rumored to be pursuing the deal because the space it can receive at 230 Park Avenue is ready for occupancy and wouldn’t require it to fork over capital to build out custom offices. Though tenants are usually cost-conscious about building out their own space, a sense of tight-fistedness seems especially apparent in the current market.
Like Chadbourne, few large tenants in recent months have shown a willingness to take new space if it means investing the millions of dollars it takes to prepare a space for occupancy.
Downtown, two large leases that have been in-process for months, seem to hint at an appreciation for the cost-savings that can be reaped from renewing. Milbank Tweed, Hadley & McCloy is in talks to recommit to its roughly 375,000 square feet at 1 Chase Manhattan Plaza, a 2.2 million skyscraper owned by JP Morgan Chase. Meanwhile, nearby, at One New York Plaza, Morgan Stanley is said to be on the verge of resigning for the 800,000 square feet it occupies there and tacking on an additional 300,000 square feet.
“Tenants are just being cautious with spending capital,” a broker told The Commercial Observer.
Though many brokers had trumpeted the short list of big-block availabilities months back, much of that furor, which was held as an indication the market could tighten and that rents could rise, has dampened in recent months. The French bank Societe Generale put at
least three floor available for sublease at 245 Park Avenue, the Midtown office tower where it committed to over 400,000 square feet
last year. Nomura also decided to reduce the size of its 900,000 square foot lease from last year at Worldwide Plaza, utilizing options
it had in that deal to give back over 100,000 square feet.
The ailing law firm Dewey & LeBoeuf is also expected to cast some space onto the market at 1301 Avenue of the Americas, though it hasn’t
officially marketed any of its floors yet.
“You’ve got space at 1301 6th possibly coming back, then you have blocks at 250 West 55th Street and 9 West 57th Street and 11 Times
Square and 1221 Sixth Avenue,” a broker said. “It’s still a short list of options but the short list keeps hanging around.”