Manhattan’s Sixth Avenue Bucks Office Trends With Brisk Leasing
It’s the comeback story the market needed — a tale all the more gripping given that the corridor’s towers were struggling even before the pandemic
Landing the nation’s largest office lease in 2023 took on extra significance amid broader real estate woes.
So it’s especially gratifying for landlord Fisher Brothers — which signed that 20-year, 18-floor, 765,000-square-foot deal for law firm Paul, Weiss, Rifkind, Wharton & Garrison at its 1345 Avenue of the Americas in late December — that such a strong finish was quickly capped with another deal. Fisher Brothers started 2024 by signing an additional 150,000-square-foot lease in the building for an as-yet unnamed tenant.
The pair of leases represents a payoff for the building’s longtime owner. Fisher Brothers had spent more than $120 million to remake 1345 Avenue of the Americas into a modern, Class A draw, including technology upgrades, new touchless elevators, and David Rockwell-designed amenities including the city’s largest indoor terrarium. Asking rents now range from $80 to $135 a square foot.
“Everything we did here was with an eye toward making the building competitive for the tenants of the future,” said Winston Fisher, a principal at the firm. “And it’s nice to see it work.”
The success at the Fisher Brothers building is also indicative of the draw of Sixth Avenue in Midtown. Also called Avenue of the Americas, it has seen a series of high-profile leases in the last couple of months from legal, financial and other corporate clients. All of it, too, comes amid a Manhattan office market that has struggled out of COVID, to say the least. At the end of 2023, office vacancy stood at 22.8 percent, according to brokerage CBRE.
Meanwhile, on Sixth, the hits keep coming: Investment bank Solomon Partners signed a 71,000-square-foot lease at 1251 Avenue of the Americas, formerly the Exxon Building, at $95 a square foot, while law firm Selendy Gay Elsberg expanded to 101,000 square feet at Vornado’s 1290 Avenue of the Americas. Another law firm, King & Spalding, also signed a recent deal in 1290, taking 175,000 square feet as part of an expansion and relocation. Yet another one, Smith, Gambrell & Russell took 41,000 square feet at Paramount Group’s 1301 A of A. The Major League Baseball Players Association took 50,000 square feet at 1325 A of A for 15 years. SL Green just signed a trio of new office leases at 1185 Avenue of the Americas, with financial firm Slatebrook, insurance firm Ryan Specialty and financial services company ICBC Standard Resources occupying 42,000 square feet in total. This comes after insurance broker Howden Tiger inked a 10-year renewal at SL Green’s 1350 Sixth Avenue when the asking rate was $90 a square foot.
“It’s a really good avenue, and has always been a great destination for businesses,” Fisher said.
In the depths of pandemic-era real estate desperation and doom loop discussions, it seemed easy to write off Sixth Avenue, however. A skyscraper canyon of corporate behemoths with large floor plates, it exhibited many of the weaknesses that made parts of Midtown melt down during the lockdowns. The theory went that scant foot traffic, a shrinking number of commuters, and the persistence of at-home and hybrid work would turn the avenue into a ghost town.
But as in-person office work and especially tourism have rebounded in recent months, the longstanding geographical advantages of the corridor have fueled that resurgence of leasing activity. Well connected to transit and close to cultural centers such as the Museum of Modern Art and Radio City Music Hall, Sixth Avenue is a consistent draw for visitors.
It also helps that the monied owners of the area — including Rockefeller Group, the Durst Organization, SL Green and Fisher Brothers — have made hundreds of millions of dollars worth of strategic capital investments in buildings near landmarks such as Columbus Circle and Rockefeller Center. There’s Fisher Brothers’ work at 1345, and the Durst Organization’s $130 million capital spend on 1155 Sixth that helped it land a 77,000-square-foot lease, including penthouse access, with Canadian tech firm Global Relay. Rockefeller Group spent $600 million on an upgrade to 1271 Sixth that wrapped in 2020. By May 2021, the 2.1 million-square-foot tower was fully occupied, according to its owner.
Signs of life, and retail activity, are clear too: Foot traffic bounced back, lunch lines wrap across sidewalks, and restaurants like Avra and Del Frisco’s are going gangbusters, said Thomas Citron, executive vice president at the New York headquarters of brokerage Colliers. Retail leases like, say, a Spirit Halloween store have been signed farther south at 620 Sixth.
“You just don’t see the type of space you can find here in Midtown East. They simply don’t have the same types of building or office product,” Citron said.
Owners are banking on the idea that they can offer large blocks of trophy space when tenants start rethinking their leases. Financial institutions see a chance to renew their space on Sixth Avenue or relocate to a better location. Corporate tenants see an opportunity to locate in a Manhattan neighborhood with access to Central Park, retail, entertainment, and an increasingly excessive luxury high street on Fifth Avenue. Capital investment behind high-end shopping has gone into overdrive there, with hundreds of millions of dollars in total investment in new retail space from brands like Rolex and Cartier, and a streetscaping plan that will create wider sidewalks on Fifth and open more cafe space.
On Sixth, office space available for sublease is evaporating, said Citron, and while lease rates vary wildly amid properties due to different debt levels and the age of certain assets, it’s still a marquee area often charging around $100 a square foot.
“Despite what you read, it was challenging to locate trophy office space for a growing firm in Midtown Manhattan,” Solomon Partners CEO Marc Cooper said in a statement after his firm signed a lease at 1251 Sixth in December.
The flurry of leasing activity is all the more notable because Avenue of the Americas wasn’t doing all that well before the pandemic. The Global Financial Crisis in 2008 and 2009 left the neighborhood looking aged, empty and out of step with tenant demands.
The so-called “Corporate Row” was “running red with vacancies,” as Commercial Observer reported at the time. Firms like Microsoft, UBS and Time were looking at downsizing or leaving. By 2015, the area had some of the city’s highest vacancy rates, and the medallions installed on the avenue’s lampposts in 1959 after the commercial stretch was renamed Avenue of the Americas, depicting different nations of the Western Hemisphere, had long since deteriorated, faded and fallen to the ground (they’re currently in the process of being reinstalled).
“Back then, 1345 had its original lobby,” said Fisher of the refurbished 1345 Sixth, which dates from 1969. “I wouldn’t have been that excited either.”
The turnaround has been years in the making, with major leases such as McGraw Hill (136,000 square feet in 2018) and First Republic, which expanded at Rockefeller Center in 2014, signaling a sea change. In recent quarters, there’s been increased tourism and foot traffic in the area. Preliminary data shows mid- to high single-digit annual increases in visits in the back half of 2023, spiking during the holidays and other periods when increased visitors would be expected, said R.J. Hottovy, head of analytical research at foot traffic tracker Placer.ai. By 2023, the vacancy rate for the Sixth Avenue/Rockefeller Center submarket was 17 percent, per Cushman & Wakefield data, below any other submarket listed in the Manhattan report.
The neighborhood’s long-term reputation as an entertainment hub helped maintain a core of sought-after tenants and street-level activity through the rough times. CBS and NBC occupy space at or near Rockefeller Center, for instance. And, when in January 2023 Fox Corporation and News Corp. signed 20-year lease extensions covering 1.1 million square feet at 1211 Avenue of the Americas, it was seen as a “clear vote of confidence in 1211 and Midtown Manhattan,” Jonathan Pearce, executive vice president at 1211 Sixth’s majority owner Ivanhoé Cambridge, said in a statement at the time.
While the plot of Sixth Avenue’s comeback revolves around office, retail has also plays a role. Bank of America signed a huge deal for a new 10,000-square-foot branch at the Grace Building at 1114 Sixth, across from its headquarters. Keith DeCoster, the Real Estate Board of New York’s director of market data and policy, said that office-heavy retail corridors were still slow to return from the pandemic and benefit from expanded tourism. But Sixth, with a unique mix of corporate, cultural and communications tenants, offers more personality.
“I think Sixth Avenue has positive momentum,” said Fisher. “I’m very bullish on Midtown and well-located Class A space.”