Bevy Of Benjamins: Big Tech Drove Record $100/SF-Plus Leasing Market In 2019
New York City had its second-most-active leasing year of the century in 2019, with roughly 43M SF of leases signed. More than a fifth of that space crossed the $100-per-SF threshold, according to new data from JLL.
SL Green’s One Vanderbilt set the bar at the top of the market with the highest-price lease last year at $185 per SF, according to JLL. While not the highest rent in city history — that goes to Citadel’s 425 Park Ave. penthouse for a whispered $350 per SF — there were a record 145 office leases signed in 2019 that had starting rents of $100 per SF, up from 129 in 2018.
The exclusive club that can charge $100 per SF has expanded from 55 buildings to 64 in 2019, according to the new JLL high-rent report. Office deals with rents over $100 per SF covered a record 8.8M SF last year, nearly twice the 4.6M SF signed in 2018.
For the first time, a majority of the priciest deals, 60%, were signed by TAMI tenants — tech, advertising, media and information companies. Even WeWork, before its collapse under the weight of its monumental losses, signed a 212K SF lease for its own headquarters at 620 Sixth Ave. for more than $100 per SF. The sublease from Spotify was the first time office space in that building cost a tenant triple-digit rents.
“In years past, it was financial tenants,” said JLL Vice Chairman Cynthia Wasserberger, who co-authored the report with Carlee Palmer. “This year tech just drove that market for new construction.”
The new construction at Hudson Yards led the way as Related and partners signed 12 leases encompassing 3.15M SF deals worth north of $100 per SF. At 30 Hudson Yards, WarnerMedia's sale-leaseback of its space covered 1.46M SF, the city’s largest trophy lease.
Google's 1.3M SF lease with Oxford Properties at 550 Washington Ave. and Facebook's 1.2M SF lease at 50 Hudson Yards were the other megadeals inked at over $100 per SF. The Spiral at 66 Hudson Blvd. and the Morgan North project where Dentsu signed a lease, both being developed by Tishman Speyer, also joined the $100-per-SF club.
The average size of all $100+ deals was 61K SF, but excluding WarnerMedia, Facebook and Google, the average deal size dropped to 34K SF. Just 1M SF of leases were signed in new construction and redevelopments in 2018 at over $100 per SF.
“Historically, the average size was 15K SF, but that number has been increasing steadily over the past several years,” Wasserberger said.
With 10 leases, Boston Properties' 767 Fifth Ave., formerly known as the GM Building, signed the most triple-digit-rent leases in one building. BXP also signed the most transactions across its portfolio, with 18 deals covering 400,500 SF.
New projects joining the exclusive club include 817 Broadway with a deal for SDC Capital, 295 Lafayette St. with a lease for the financial technology company Plaid and 2 Crosby with its deal for Maria Tash in the SoHo building's penthouse.
“We have awesome product,” said Greg Kraut of K Property Group, which owns 2 Crosby.