KPMG Cuts Office Space by 40 Percent in Hudson Yards Move
KPMG inked a 20-year deal for 456,000 square feet across 12 floors of the under-construction Hudson Yards skyscraper to consolidate its 800,000 square feet spread across 345 Park Avenue, 560 Lexington Avenue and 1350 Avenue of the Americas, the largest lease so far this year in the city, the Wall Street Journal first reported. KPMG declined to comment on the asking rent.
The accounting firm will join two other tenants in the under-construction 2 Manhattan West: law firms Clifford Chance and Cravath, Swaine & Moore.
KPMG’s move is another blow to New York City’s office market, which has recently seen several major firms reveal plans to jettison unused space. Amazon and Meta announced they would slow their expansion plans and Yelp said it would close its Flatiron District offices as it shifts to a remote work model.
HSBC Bank USA cut its New York City footprint in half when it signed a lease in May to move its headquarters to Tishman Speyer’s The Spiral, part of the company’s attempts to ditch 40 percent of its real estate worldwide.
Unlike HSBC, KPMG didn’t plan to cut back on its office space when it started searching for new digs in 2018. But after the COVID-19 pandemic pushed the firm into a remote model, KPMG decided to look for smaller offices to save money on its New York City real estate costs, WSJ reported.
“We really started to think about our leases that were expiring over a number of years,” Yesenia Scheker Izquierdo, KPMG’s new york office managing partner, said. “The options were limited. This was a significant amount of space that we were going to market with … At the end of the day, looking at the [neighborhood] and the configuration of the building, Two Manhattan West really emerged as the unanimous choice for us.”
Remote work has pushed other companies to cut back too. A July survey from flexible workspace software provider Robin found that nearly half of 250 companies contacted would cut their office space in the next year and a Federal Reserve Bank of New York survey found that 16 percent of service firms had already reduced their office footprints after adopting a hybrid work model. Meanwhile, Manhattan saw a record-high office availability rate of 18.3 percent in the second quarter as leasing remained slow, according to a Newmark report.
CBRE’s Michael Geoghegan, Lewis Miller, Joseph Cabrera, Douglas Lehman and Cara Chayet handled the deal for KPGM. Brookfield’s Jeremiah Larkin, Duncan McCuaig, Mikael Nahmias, P.J. Massey and Dave Caperna represented the landlord in-house, alongside Cushman & Wakefield’s Bruce Mosler, Josh Kuriloff, Robert Lowe, Ethan Silverstein, Matthias Li and Nicholas Dysenchuk. CBRE did not immediately respond to a request for comment and C&W declined to comment.
Update: This story has been updated to include a statement from KPMG.
Celia Young can be reached at firstname.lastname@example.org.