New York City’s leasing stats this year might be worse than in 2022, but at least the top deals are bigger.
Last year ended with KPMG’s 456,518-square-foot deal at 2 Manhattan West clinching the No. 1 spot. This year’s top deal dwarfed that with Davis Polk & Wardwell’s 710,000-square-foot expansion and renewal at 450 Lexington Avenue.
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And it wasn’t just the top spot that was larger. The second through sixth largest deals of 2023 also were bigger than their counterparts in 2022.
But, before we all tip back the Champagne and pronounce that 2023 is the best, the office market is saved and we’re all going to live forever, it’s worth looking at a market report to temper the good feelings.
New York City saw 12.55 million square feet of office leasing through the first nine months of 2023 (the latest numbers available at the time of publication), down 33 percent compared to the same time last year in 2022, according to a CBRE report.
And leasing activity in the third quarter totaled 4.3 million square feet, 22 percent behind the city’s quarterly average of 5.54 million square feet, CBRE found.
Still, the borough’s availability rate dropped 10 basis points in the third quarter. Plus, 2023 has seen more six-figure deals compared to 2022, and — if Commercial Observer’s esteemed competitors are to be trusted — the city is expected to see even more of those before the ball drops in Times Square.
Some further trends CO noticed in the top 10 deals: Seven of them were renewals (three of which were also expansions); there were repeat customers on the list (so expect a bit of repetition); and three of them were law firms, which have been active in the market this year.
So, with those measured expectations, here’s a look at the top 10 office leases of 2023 in New York City as provided by CBRE, Colliers, Cushman & Wakefield, Newmark and JLL, and checked against news reports.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
Davis Polk & Wardwell, 450 Lexington Avenue
710,000
New York City got its largest deal of the year in the waning weeks of summer.
Global law firm Davis Polk & Wardwell renewed its long-term headquarters at 450 Lexington Avenue in August and tacked on 30,000 square feet in the process, bringing its grand total to 710,000 square feet.
Davis Polk has been a tenant of the property since 1989 and last reupped in 2012, when RXR bought the building.
RXR handled the deal in-house via William Elder and Andrew Ackerman while CBRE’s Lewis Miller, Andrew Sussman and Munish Viralam represented Davis Polk.
City of New York, 110 William Street
640,744
Pacific Oak Capital Advisors got a break on its beleaguered Financial District office tower at 110 William Street in June. Not only did it reach an agreement to restructure its more than $334 million in outstanding debt on the 32-story property, but it also landed the City of New York for 640,744 square feet.
It’s not clear who the brokers on the deal were, but the city signed a 20-year lease for the office space with an annual rent of $44 per square foot for its New York City Administration of Children’s Services, as CO previously reported.
The city will occupy the property in a staggered manner, first occupying 200,000 square feet in a different block as the owner finishes up a $110 million to $130 million tenant improvement project, CO reported.
Citadel, 350 Park Avenue
585,460
The third biggest lease of the year is far from traditional (and brace yourself because you’ll be hearing from these folks again later on).
Kenneth Griffin’s Citadel signed a 10-year master lease for Vornado Realty Trust’s entire 585,460-square-foot office building at 350 Park Avenue, with an initial annual net rent of $36 million.
The complex deal will allow Citadel the option to invest in the future development of the site. The investment firm will either acquire a majority interest in it and other neighboring buildings to build a 1.7 million-square-foot office tower; execute a 15-year anchor lease for 850,000 square feet at the new tower; or just buy the development site outright for $1.4 billion.
The deal was announced in December 2022, yet closed in the first quarter of this year.
It’s unclear who brokered the arrangement, but they clearly are very creative with deal structures.
City of New York, 150 William Street
537,950
This isn’t a typo: New York City cracked two of the largest leases this year, and both were on William Street.
For this one, the city extended the New York City Administration for Children’s Services’ 537,950-square-foot lease at 150 William until August 2025.
The agency has occupied 19 floors of the KF Braum Management building since 1996 and operates a walk-in service center offering a broad array of support programs.
ACS plans to relocate to the previously mentioned 110 William Street starting in 2025. It’s unclear what will happen to the 150 William space then.
The brokers for the deal were also unclear.
Citadel, 40 East 52nd Street
384,142
We tried to warn you that there would be some repetition on this list.
Citadel joins the party again with another master lease for 384,142 square feet at Rudin’s 40 East 52nd Street.
The property is adjacent to 350 Park Avenue and will feature in any future redevelopment plans along with 39 East 51st Street, which Rudin and Vornado teamed up to buy for $40 million as part of the deal.
As stated previously, the evidently creative brokers of the deal are not known.
Weill Cornell Medicine, 575 Lexington Avenue
300,000
Finally, a fresh face on this list.
Coming in at No. 6 is Weill Cornell Medicine’s 300,000-square-foot expansion and renewal at George Comfort & Sons and Cannon Hill Capital Partners’ 575 Lexington Avenue.
The 30-year deal renews Weill Cornell’s 200,000 square feet in the property and tacks on another 100,000 square feet. Weill Cornell has been active this year. This lease came on the heels of the medical school announcing it would build a $260 million dormitory at the site of the former Church of the Epiphany on the Upper East Side.
Weill Cornell also inked a deal in November to take over 200,000 square feet at 1334 York Avenue from auction house Sotheby’s, which is moving to 945 Madison Avenue.
Newmark’s David Falk, Andrew Sachs and Ben Shapiro of Newmark negotiated on behalf of Weill Cornell in the deal, while George Comfort handled it in-house via Peter Duncan and Dana Pike.
Two Sigma Investments, 100 Avenue of the Americas
265,217
Hedge fund Two Sigma Investments had considered leaving its longtime 100 Avenue of the Americas home but instead kicked off 2023 recommitting to the building.
Two Sigma signed a renewal to keep its 265,217 square feet in the Tribeca building for another seven years.
The hedge fund — which also has a 107,000-square-foot office in the neighboring 101 Avenue of the Americas — had a lease expiration at 100 Avenue of the Americas looming this year and was in the market for a 400,000- to 600,000-square-foot space in a single building.
Instead, it kept its 100 Avenue of the Americas space until 2029, when its lease at 101 Avenue of the Americas also runs out.
Cushman & Wakefield’s Peter Trivelas and Chris Helgesen represented Two Sigma in the deal, while Newmark’s David Falk and Peter Shimkin handled it for landlords Trinity Real Estate, Norges Bank Investment Management and Hines.
Paul Hastings, 200 Park Avenue
256,840
In a lease that didn’t get much fanfare (except some mentions in office reports), law firm Paul Hastings renewed its space in Tishman Speyer and Irvine Company’s MetLife Building.
The firm first moved into 180,000 square feet in the building at 200 Park Avenue in 2014, when it downsized from the 240,000 square feet it had at 75 East 55th Street, The Real Deal reported.
Details of Paul Hastings’ latest deal are scant — including the names of the brokers — but it was categorized as an expansion and renewal.
Ralph Lauren, 601 West 26th Street
255,750
Coming in at No. 9 is arguably the most fashionable tenant on the list.
Ralph Lauren signed a renewal for its 255,750-square-foot office at RXR’s Starrett-Lehigh Building in October.
The fashion company has had its North American operations in the building at 601 West 26th Street since 2017.
CBRE’s Eric Deutsch, Ken Meyerson, Ariel Ball, Elliot Bok and Jared Freede represented Ralph Lauren, while Denise Rodriguez handled it for RXR in-house.
Cadwalader, Wickersham & Taft, 200 Liberty Street
225,301
Last but not least, another law firm renewed its space in the borough.
This time it’s Cadwalader, Wickersham & Taft recommitting to its space in Brookfield Properties’ 200 Liberty Street for an undisclosed amount of time.
Like the deal with Paul Hastings, details are scant, but Reuters reported that the law firm got a haircut during the deal and dropped nearly 120,000 square feet.
So we end the list with some good news/bad news. Seems fitting for the year.
