There’s an extremely positive yarn to spin about Manhattan office leasing in 2021.
In October, commercial leasing was 109 percent above its five-year average in Midtown South. That comes after five months of positive absorption.
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And, in a recent market report, CBRE noted that there was more than 2 million square feet of monthly leasing activity in Midtown in November — the first time that has happened since 2019. Moreover, year over year, the market saw 28 percent more square footage taken than in 2020. The availability rate fell 10 basis points and average asking rent was up 1 percent from last year.
All indisputably good things; those are the kinds of numbers that tell a markedly different story than the one told in 2020.
However, in terms of big deals, New York’s 2021 office record looks a lot like the previous unlucky year.
The year 2020 was a time of renewals and smaller bets on the future of office. Companies re-upped, or they agreed to something considerably more modest than they might have been expected to sign in the past. While some big tech names like TikTok and Facebook decided to make long-term investments in their real estate in 2020, for the most part everybody decided to play it conservatively.
A year later, companies are still being conservative.
Sure, there were a few marquee media and entertainment companies like NBC and Madison Square Garden but there were no tech firms that did anything spectacular in terms of leasing. (There was, indeed, a very notable tech deal involving a company whose name rhymes with Schmoogle; but it was a sale not a lease and it won’t close until 2022.) Mostly, we saw well-capitalized entities like law firms, insurers, financial firms, ad firms or the city itself taking the biggest of the big.
And, while the largest lease of the year (Blackstone (BX)) is more or less on par with the biggest of 2020 (Facebook), there was nothing that came close to cracking the million-square-foot number. (Three leases reached beyond the 1 million-square-foot mark in 2019, and a fourth was 960,000 square feet.)
Of course, it was always overly optimistic to assume New York would return to 2019 levels and volume that quickly. Baby steps were the thing to monitor and care about.
As for the bigger strides, we asked for data from CBRE and Cushman & Wakefield to show what made it to the top of the heap leasing-wise in 2021. These are the 10 deals they came back to us with. (One final note: An extension by the NYC School Construction Authority could have made our list — Newmark, which repped the agency, said it was for 235,000 square feet and 15 years — but we could not confirm by press time.
1. Blackstone, 345 Park Avenue
In 2020, Blackstone became the biggest private landlord on planet Earth. It therefore wouldn’t be so crazy that the investment giant, with a global real estate portfolio estimated at $448 billion, according to its website, would have signed the biggest lease in New York in 2021. (Although with that much real estate couldn’t it have blocked some off for its office?)
The company renewed its lease at Rudin Management’s 345 Park Avenue and grabbed an additional 80,000 square feet, bringing its space to 720,000 at the 44-story Midtown tower. Thomas Keating of Rudin handled the deal for the landlord; Blackstone had no brokers.
“This expansion marks a significant commitment by one of the financial industry’s leading firms and signals an important part of New York’s recovery,” Bill Rudin, CEO of Rudin Management, said in a statement when the deal was signed in March. “We are thrilled that Blackstone has chosen to expand and extend our more than 30-year partnership, and we look forward to accommodating their office space needs for many years to come.”
So take that, Miami!
2. Interpublic Group of Companies, 100 West 33rd Street
One of the nice stories to open 2021 was the unveiling of Moynihan Station. Few things seemed to breathe more life into Midtown South than a spanking new train station, whether it has places to sit or not. It seemed to say that a tired, unlovely thing (like Penn Station) could get a brand-new coating and be something much nicer.
You have to wonder if that didn’t cast a spell over the rest of the neighborhood.
In September, that part of Midtown South kept an important tenant when the 54,000-person marketing and advertising firm IPG renewed its 514,000-square-foot New York office at Vornado Realty Trust’s 100 West 33rd Street, above the Manhattan Mall. Scott Panzer and Shannon Rzeznikiewicz of JLL represented IPG; Jared Solomon and Jared Silverman of Vornado represented the landlord in-house.
“We are very, very, very strong believers that we will create enormous values in the Penn District and we will create a district that will command premium pricing and we couldn’t be more excited about it,” Vornado Chairman Steve Roth said in announcing the deal (among others) during an investor call in November. “We are very, very, very optimistic that the new government leaders at the city and state will be constructive, will be business-friendly, and recognize that the Penn District is something that requires and demands their attention and we believe we will get their positive attention.”
3. Madison Square Garden, 2 Penn Plaza
We weren’t kidding about the area around the Penn Station railroad station. The third biggest lease of the year was that of a name associated with the surroundings since Irving Felt struck a deal with the Pennsylvania Railroad for the land above the station in 1960: Madison Square Garden.
In November Vornado announced that Madison Square Garden Entertainment (MSG) was renewing its 428,000 square feet of office space for its corporate headquarters just across from the Garden at 2 Penn Plaza for 20 years.
It’s understandable that MSG would heed Vornado’s offer. The real estate investment trust is sinking millions into the redevelopment of the property, courtesy of plans from MdeAS Architects, which include a full recladding of the exterior and a 65,000-square-foot rooftop park.
Josh Glick, Jared Silverman and Jared Solomon handled the deal internally for Vornado; Newmark’s Neil Goldmacher and Andrew Sachs represented MSG.
4. Fried, Frank, Harris, Shriver & Jacobson, 1 New York Plaza
One of the real estate community’s seasonal rites (as sacred as the lighting of the Rockefeller Center tree, or staying off the streets during SantaCon) is the Fried Frank holiday party.
Every December thousands cram into the East 42nd Street Cipriani to drink and carouse, cheek to jowl, with the industry’s assorted masters of the universe. After a year off, the joy returned last week. Fried Frank was doing its party a little smaller than usual, thanks to COVID restrictions, but the magic was there.
It felt, again, like normal times. Times when you wouldn’t break a sweat signing a 400,000-square-foot lease. Which is also what the law firm did.
Fried Frank renewed its 400,000-square-foot office at Brookfield’s One New York Plaza in July. CBRE’s Stephen Siegel, Craig Reicher, Tim Dempsey, Ramneek Rikhy and Ariel Ball represented the firm, and Brookfield was represented in-house by Jeremiah Larkin, Mikael Nahmias and Hayley Shoener.
“We are thrilled to remain at One New York Plaza,” David Greenwald, chairman of Fried Frank, told Commercial Observer at the time. “This is the beginning of another exciting chapter for us as we look forward to contributing to the city’s ongoing revitalization post-pandemic, our firm’s continued growth, and working with our clients on their most complex matters.”
5. NBC Universal, 1221 Avenue of the Americas
It’s very possible that upon hearing about NBC Universal’s deal to take 339,933 square feet at Rockefeller Group’s 1221 Avenue of the Americas you might feel like you were experiencing an acute case of déjà vu .
In July 2020, Comcast (NBC’s parent company) signed a short extension at the space right across the street from Rockefeller Center (NBC’s longtime home), where it had a satellite office.
Now, it has gone for yet another (five-year) extension. Cushman & Wakefield’s Paige Engeldrum, Pierce Hance, Robert Lowe, Daniel Organ and Maria Travlos represented Rockefeller Group in the transaction, and CBRE’s Timothy Dempsey, Susan Nagler-Cohen, Paul Stimpfle, Marlee Teplitzky and Mary Ann Tighe represented the tenant.
6. Department of Citywide Administrative Services, 60 Broad Street
There is one tenant whose ability to pay rent doesn’t really depend on the vicissitudes of the market or on a pandemic. This is a tenant who, while solid and enduring, landlords still treat with a certain amount of nervousness. And with good reason.
We’re talking about the government.
In July, the Department of Citywide Administrative Services took 308,769 square feet at 60 Broad Street. (It’s the same building where in February of last year another government agency — the state Office of General Services – took 452,000 square feet, marking the fourth-largest lease of 2020.)
JLL’s Eliza Akers, Clayton Kline and John Wheeler represented Piedmont Realty Trust, the landlord of the 1 million-square-foot FiDi tower, and Cushman & Wakefield’s Robert Giglio represented the city.
7. Chubb, 550 Madison Avenue
There are certain bragging rights tenants get when they’re the first to take space in a building. They’re a pioneer; a visionary. They’ve gotten in on the ground floor of something. And if the property is in the center of Manhattan and traded for an ungodly sum of money it adds to the mystique.
Chubb insurance firm, meet 550 Madison Avenue.
Last month the insurer became the first tenant at the 41-story tower, for which Olayan Group plunked down $1.4 billion to the Chetrit Group back in 2016 and sunk another $300 million into renovating. Chubb’s 241,647-square-foot lease accounts for some 31 percent of the rentable office space at the building.
“Five-fifty Madison is unlike any building in New York, combining the single healthiest office environment in the city with globally recognized landmark architecture,” Erik Horvat, head of real estate for Olayan America, said in a statement in November. “We pride ourselves on creating world-class spaces that inspire leadership and creativity, and we are proud to welcome Chubb — a company that shares those values — as our anchor tenant.”
CBRE’s Mary Ann Tighe, Howard Fiddle, Scott Gottlieb and Arkady Smolyansky represented the landlord in the deal; their CBRE colleagues Conor Denihan, Chris Hogan, Christopher Mansfield, Susan Nagler-Cohen and John G. Nugent represented Chubb.
8. U.S. Securities and Exchange Commission, 200 Vesey Street
One of the biggest sales of 2021 was 100 Pearl Street in the Financial District. GFP and Northwind Group bought the property in 2018 for $308 million, sunk about $250 million into it, and turned around and signed a contract with Commerz Real to sell it for $850 million.
Part of what made it attractive was the ritzy makeover, and another part was the fact that it had already lured in tenants like the U.S. Securities and Exchange Commission, which had signed for 241,339 square feet of space.
That move into 100 Pearl will take a bit. In the meantime, the agency felt the need to renew its current 305,525-square-foot space at Brookfield’s 200 Vesey Street for a year, making it the eighth-biggest lease of 2021. Brookfield was represented in-house by Mikael Nahmias, and William Korchak of JLL (who also handled the 100 Pearl Street deal) represented the SEC. Taking rent was $83 per foot.
9. Dechert, 1095 Avenue of the Americas
Pre-COVID, as a lot of businesses touted the open floor plan as the future of the office, law firms seemed to shy away from that model. A firm still needs to conduct business in private and, for that reason, an office — the kind with real, individual offices — is essential. It’s why law firms take up a lot of room in New York’s office ecosystem.
Dechert is one of the big boys of the legal world; the firm has, per its website, 22 locations globally and works with 40 Fortune 100 companies. That means it needs space, and just before Thanksgiving it renewed the 241,000 square feet that it has at Ivanhoe Cambridge and Callahan Capital Properties’ 1095 Avenue of the Americas — a.k.a. 3 Bryant Park.
Mark Weiss and Jon Herman of Cushman & Wakefield represented Dechert; Bob Alexander’s team at CBRE represented the landlord.
“It’s a pretty terrific building,” Weiss told CO, “and, frankly, it’s a very good landlord. They’ve been there for a while and the landlord has been really responsive to the client’s needs. It was the combination; it was everything lining up the way it’s supposed to that led to this conclusion.”
10. The Legal Aid Society, 40 Worth Street
The law firms on this list thus far have largely been the kinds that advise companies on their mergers and acquisitions, or high-net-worth individuals on their tax liabilities; in other words, the moneyed elite of the world whose options are fairly limitless.
Of course, the needy and low-income desperately need the services of lawyers, too, and their attorneys also need space and privacy to conduct their business.
Enter The Legal Aid Society, which expanded its current 75,000-square-foot footprint at 40 Worth Street in FiDi in June.
The nonprofit is consolidating outposts at 199 Water Street and 80 Pine Street and plans to move into a larger, 198,900-square-foot space at GFP’s 40 Worth in the fourth quarter of 2022.
“We are thrilled that The Legal Aid Society is consolidating its Lower Manhattan offices with us, which will create a single location and thereby make it easier for its staff and clients to execute their mission,” GFPs Brian Steinwurtzel said in a statement to CO at the time.
Steinwurtzel handled the deal in-house along with Roy Lapidus. Craig Reicher, Christopher Mansfield, Greg Maurer-Hollaender and Peter Gamber of CBRE represented The Legal Aid Society.
