Like squirrels stowing away nuts for the winter, Manhattan office tenants in 2020 have still been dreaming of a future of normalcy — and they’ve been signing the leases to prove their seriousness.
This is not to say that office leasing wasn’t badly hurt by the pandemic. It was. In Commercial Observer’s 2019 look back at the leases of that year, the top lease was 1.5 million square feet. This year, the top lease was half of that. (Interestingly, the tenant was the same in both deals. See below.) Which sort of speaks to the general sense of slowdown. Each month, horrible year-over-year numbers come out, and brokers and owners keep praying for Moderna and Pfizer to save us all.
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However, the big ones that crossed the finish line (most were, as one might predict, renewals or extensions) offer an interesting window into the state of the office lease in general.
The headliners were tech and media tenants. There were other stalwarts like banks, law firms, medical space, and government agencies that rounded out the list. Sort of what one would expect, when other businesses might be too financially strapped or wary to make decade-long commitments.
CO contacted sources at Newmark (NMRK), Cushman & Wakefield (CWK), CBRE (CBRE) and CoStar (CSGP) Group to examine their data, and these were the biggest and best leases of the year. This is what we learned.
Update: This story originally cited a lease by iHeart Media / Katz Media Group as one of the biggest leases of the year, but used incorrect data. iHeart Media did not sign any renewals on their space in 2020.
1. Facebook, 390 Ninth Avenue
In 2019, the biggest lease of the year was a splashy headliner: Facebook, the biggest social media company in the world, was taking 1.5 million square feet in the biggest development project in the city, Hudson Yards.
In a case of CRE deja vu, Facebook takes the title again in 2020, with a 730,000-square-foot lease at Vornado Realty Trust’s Farley Building.
The news that Facebook was signing was, for many, a great sigh of relief. It signaled two important things:
a. Rich companies could still afford a massive, pricey Manhattan lease.
b. Despite the fact that tech firms might have the most options for work-from-home, some of them still believe their future is in a New York City office.
Photo: CoStar Group
3. Debevoise & Plimpton, 919 Third Avenue
In January, the storied white shoe law firm Debevoise & Plimpton, announced it was taking a 20-year lease on some 530,000 square feet in Tishman Speyer’s Hudson Yards development, The Spiral.
Actually, if you want to be technical, the deal that was inked at the tail end of 2019. Too bad, because that would have been a doozy.
Well, take cheer: 2020 got in on the action, too. (A little.) In February, the firm signed an even bigger extension (616,732 square feet) at its current headquarters at SL Green Realty’s 919 Third Avenue.
This would seem to be a case of Debevoise tiding itself over as it waits for The Spiral space to be finished. (It won’t be until the second half of 2022.) Debevoise put an extra six months on its lease to take the firm through the move. Still, a deal’s a deal.
4. New York State Office of General Services, 60 Broad Street
The State of New York has a roughly 44 million-square-foot real estate portfolio. And, as one might expect, to keep the empire humming, it’s been signing real estate deals.
In February, the Office of General Services took 452,000 square feet at 60 Broad Street, also known as 25 Beaver Street, in Piedmont Office Realty Trust’s 1 million-square-foot tower in the Financial District.
“In spite of this pandemic,” CBRE’s Steve Siegel told CO back in September, after handling the deal, along with his colleagues Bruce Surry, Peter Larkin and Mark Bezold, “we continue to sign deals.” Godspeed!
5. NBC Universal, 1221 Avenue of the Americas
Rockefeller Center has long been NBC country, so it’s no surprise that NBC Universal would want to stick with its 339,833 square feet of office space just across the street at 1221 Avenue of the Americas.
Comcast (NBC’s parent company) signed a one-year extension for its space in July.
Back in 2013, NBC Universal had a somewhat more modest footprint at the Rockefeller Group-owned, 2.6 million-square-foot building, but NBC upped its presence there by nearly 100,000 square feet and staked out the 27th through 29th floors, according to the New York Post.
Mary Ann Tighe and Timothy Dempsey of CBRE represented NBC Universal in this summer’s transaction; and Robert Lowe, Paige Engeldrum, Maria Travlos, Dan Organ and Pierce Hance of Cushman & Wakefield represented the Rockefeller Group. The asking rent was in the $90s per square foot.
6. BNP Paribas, 787 Seventh Avenue
Finance is still a coveted, stable tenant, so it’s no surprise that one of the big leases of 2020 would go to BNP Paribas.
The French financial giant signed a 20-year renewal for 323,000 square feet at 787 Seventh Avenue … but that comes with a significant “however.”
BNP had previously occupied 454,000 square feet in the 1.7 million-square-foot Axa Equitable Center. In other words, BNP saw a lot of room to cut space. (It should also be noted that, at the same time, it renewed 150,000 square feet at Newport Tower in Jersey City.)
JLL’s Peter Riguardi and Ken Siegel represented BNP. CBRE’s Howard Fiddle represented CommonWealth Partners and the California Public Employees’ Retirement System, which owns Axa.
7. Justworks, 55 Water Street
In the summer of 2019, when a pandemic was still something that happened largely in history books, Justworks — the software company that automates payroll, benefits and human resources — announced that it was taking 270,000 square feet at New Water Street Corp.’s 55 Water Street to be its new headquarters at $58 per square foot.
Well, last month, the company decided to add on a two-year extension.
CBRE’s Howard Fiddle, Evan Haskell, Brad Gerla, Ryan Luck and Mary Ann Tighe brokered the deal for the landlord, and there was no tenant rep for Justworks.
8. U.S. Securities and Exchange Commission, 100 Pearl Street
Ronald Reagan once said that the nine most terrifying words in the English language were, “I’m from the government and I’m here to help.”
Ronnie, stay out of this.
Honestly, with a big, 241,339-square-foot relocation, this would be a case of a government agency offering the world of office leasing a lot of welcome help.
In April, the S.E.C. announced that it was pulling up stakes at its office at 200 Vesey Street and moving south to Northwind Group and GFP Real Estate’s 100 Pearl Street.
William Korchak of JLL represented the S.E.C. on the deal, which took the 21st through 26th floors and part of the 20th floor. Newmark’s Hal Stein, Andrew Peretz, Ben Shapiro, Daniel Appel and Travis Wilson represented the landlords.
Technically, the S.E.C. would also earn the #7 spot on this list for the extension at 200 Vesey as it waits to begin its 20-year lease at 100 Pearl (the agency is expected to move in at the end of next year or the first quarter of 2022). But we figured we could combine the two here.
9. TikTok, One Five One
Aside from Facebook, TikTok’s 232,138-square-foot deal at the Durst Organization’s Times Square One Five One was easily the most touted of the tech leases to be signed in the last 12 months.
It was the first major deal of the pandemic and seemed to signal to other young companies that it was safe to go in the water again.
As CO reported back in May, TikTok took five floors that used to belong to Skadden, Arps, Slate, Meagher & Flom at the top of the 48-story tower, and another two at the base that was once rented by Condé Nast.
While the terms of the deal were largely kept under wraps, asking rents for the higher floors ranged from $105 to $135 per square foot.
- 10. Apple, 11 Penn Plaza
Vornado Realty Trust has definitely honed its pitch to the big tech tenants.
Not only did Facebook take the plunge this spring, but in February Apple nabbed 220,000 square feet at Vornado’s 11 Penn Plaza.
The five-year lease for the 11th to 14th floors of the 23-story building between West 31st and West 32nd Streets, was first reported by The New York Post and had been occupied by Macy’s. It was negotiated on behalf of Apple by Peter Riguardi, Martin Horner and Kirill Azovtsev of JLL and Vorando’s Glen Weiss handled the deal in-house for the landlord.
And in case anybody doubted Apple’s commitment or thought it was pre-COVID thinking, last month they turned around and inked a six-year sublease with Macy’s to take another 116,000 square feet for an asking rent in the mid-$60s per square foot, which was first reported by The Real Deal. (Riguardi, Horner and Kirill Azovtsev again represented Apple; Scott Gottlieb, Liz Lash and Ross Zimbalist of CBRE represented Macy’s.)
And the biggest retail lease of the year goes to ...
This one would be a split decision: Two leases. Both 120,000 square feet. Both by Home Depot.
The home improvement emporium reupped this month at its Chelsea location at Williams Equities’ 28-40 West 23rd Street for 15 years. (10-year leases are for wusses.)
This would have been impressive any year, but Home Depot outperformed itself by taking yet another lease on the Upper East Side at Gazit Horizons‘ 410 East 61st Street, also for 120,000 square feet!
Hmm … Home Depot. As in, does this signal a bet that, if people are going to keep working from home, they’re going to need to improve it?
Hey, like we said earlier, a deal’s a deal.
