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, Cushman & Wakefield, CBRE and CoStar 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.
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.
- 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.)
