Sunday Summary: Manhattan Leasing Went Crazy in January

That lesson of fortitude was strengthened again when Colliers released a report showing that Manhattan office leasing positively skyrocketed last month with some 3.6 million square feet of leases. That’s a 24.4 percent jump from December and a 56 percent jump from last year. (We always knew we’d be back!!)

“This is certainly a sign that the robust demand we saw last year has continued in the opening innings of 2025,” said Colliers’ Franklin Wallach. “And the strong activity was complemented by us continuing to see blocks of space come off the market.”

And Colliers had the evidence to back this up.

A&E Television Networks, for instance, renewed its 151,920-square-foot office at Republic Investment Company’s 227 East 45th Street.

Even more impressive, law firm Mayer Brown renewed and expanded its footprint at Rockefeller Group’s 1221 Avenue of the Americas to 330,662 square feet.

Those who doubted Gotham’s demand can take note of the fact that a recent Savills report found Midtown Manhattan’s rents are the third most expensive in the world, behind only Hong Kong and London’s West End.

“Ultra-prime offices remain a key strategic asset for many businesses globally, and almost all industries saw an increase in square footage transacted in [the second half of 2024] compared to the first half of last year,” said Rick Schuham of Savills. “In 2025, we expect continued rent and leasing volume growth as the net effect cost growth we have seen across the world over the past year is set to continue for the foreseeable future.”

All coming together

In real estate, as in salary negotiations, timing is everything.

A lot of sellers have bitten the bullet and decided to sell at a loss — and a lot of buyers are finding incredible bargains.

For example, a 222,667-square-foot Class A office called The Park Calabasas in Calabasas, Calif., northwest of Los Angeles was purchased by Cross Ocean Partners and the Palisade Group for $69.4 million from Gemdale USA — which is a roughly $10 million discount from what Gemdale paid for the property back in 2021.

Back in Manhattan, David Werner Real Estate Investments is in contract to buy the 18-story 300 East 42nd Street for $52 million from Fortress Investment Group — which is a lot less than the $122.5 million the Midtown property traded for in 2019. (Fortress was the mezzanine lender that picked it up when previous owners walked away.)

Some of the properties are not selling at a loss — they just haven’t traded in a very long time. New York University plunked down $75.5 million for Hebrew Union College – Jewish Institute of Religion at 1 West Fourth Street, which had owned the property since 1978.

And, in South Florida, developers are throwing out both Pete Alonso and Juan Soto numbers in the projects they’re plotting.

Related Group, for one, filed plans for a $148 million multifamily development in Coconut Grove.

But an even bigger play is AD1 Global, Sonesta International Hotels and Mint Developers’ proposal for the 82-story condo-hotel called James Hotel & Residences, which will cost some $850 million and include 336 furnished units.

Earnings, earnings, earnings!

There were more earnings calls last week.

Blackstone Real Estate Income Trust (BREIT) sounded bullish on their call because — well, because they’re Blackstone.

Simon Property Group said that it generated some $4.6 billion in leasing and sales and is planning construction on “four to five mixed-use projects” and opening a new luxury mall in Indonesia, according to CFO Brian McDade.

Apollo Global Management (APO) reported that they now had a staggering $751 billion of assets under management as of the end of 2024 and an adjusted net income of $1.4 billion, which was better than they were expecting.

“2024 highlights include record origination activity exceeding $220 billion, inflows of more than $150 billion, and assets under management surpassing $750 billion,” said company CEO Marc Rowan on the earnings call. “Entering 2025, our growth strategy is clear, our team is focused on execution, and we are playing to win.”

AvalonBay Communities could boast $1.1 billion in construction starts as well as raising $2 billion in new capital. 

“By the end of this year we expect to have $3.5 billion under construction, which is 50 percent higher than where we are today, setting the stage for a further uplift in earnings growth and value creation in 2026 and 2027,” said CEO Benjamin W. Schall. “Our balance sheet is as strong as it’s ever been, which provides the capital to leverage our strategic capabilities to fuel further growth in 2025 and beyond.”

Even those with less-than-stellar results like Ares Capital (which announced that profits had dipped from $361 million in the third quarter of 2024 to $359 million in the fourth) could tout good news like the appointment of Kort Schnabel as its new co-president.

And the slowdown in industrial real estate didn’t stop Rexford Industrial Realty from leasing 1 million square feet of space last quarter. (That’s considerably less than the previous quarter, true. But 1 million square feet is not bad.)

Brooklyn bound

The words “Brooklyn” and “baseball” will always strike a note of sadness in the heart of New Yorkers of a certain age.

But swap out “baseball” for “real estate” and a whole new generation gets excited.

This is not necessarily completely obvious. Brooklyn’s population has declined somewhat in recent years, according to data from the U.S. Census, yet demand for apartments and condos has never been higher and vacancy rates have never been lower thanks to a nearly dry residential pipeline.

“Brooklyn right now is honestly pretty starved for new supply in terms of new development condos,” said Corcoran’s Ryan Schleis. “The pipeline is not big enough right now to provide the kind of relief and amount of future inventory that buyers and agents are looking for.”

Neighborhoods like Williamsburg have continued to change with the times and, since it was rezoned 20 years ago, Williamsburg in particular has been the staging ground for a lot of the supply that has come.

One person who has really bet big on the neighborhood has been Miki Naftali. His 850-unit Williamsburg Wharf currently under construction consists of five 22-story towers along the East River and has fetched serious prices ($7 million) for penthouses. (The project is a mix of rental and condo.)

It’s worth letting Naftali explain the vision in full here.

See you next week!