The 7 Biggest Office Leases In Manhattan This Year
Uncertainty over the future of the office crippled leasing activity in New York City this year, but shiny new office towers showed that there is still money to be made in the market.
Law, finance, consulting and IT firms snapped up space in some of Manhattan’s most hotly anticipated office towers. Landlords like Brookfield and SL Green, who started construction speculatively on billion-dollar projects, have been able to set the market. Big deals in older space have been sparse.
“It’s definitely still a tenant's market, but actually in the Class-A and trophy buildings in that flight to quality that you keep hearing about, their rents are actually rising,” JLL Vice President Lauren Calandriello said earlier this year. “The commodity space is where landlords are a little bit more flexible on rents and we're continuing to see concessions be high with free rent.”
These were the biggest commercial leases of 2022, according to data provided to Bisnow by CBRE and JLL.
Building: Two Manhattan West
Submarket: Hudson Yards
Size: 456K SF
The global economy may have been rocky this year after going through the ringer during the previous two years of pandemic uncertainty, but there are no signs of that for Brookfield’s yet-to-be-completed Hudson Yards office tower, Two Manhattan West.
Multinational consulting giant KPMG signed the biggest lease of the year in the tower in August when it decided to consolidate three of its NYC offices into one space for 5,500 employees. KPMG reduced its office footprint from 800K SF as it committed to hybrid work on a longer-term basis. The consulting giant expects to move in around 2025.
The skyscraper, which topped out in January and is due to deliver next year, is the final part of the developer’s Hudson Yards megaproject that will also contain 6M SF of office space, a 2-acre public park, a boutique hotel, more than 200K SF of retail space and a luxury rental tower. This isn't its only appearance on this list.
Franklin Templeton and IBM
Building: One Madison
Submarket: Midtown South
Size: 347K SF and 328K SF
Landlord: SL Green Realty Corp.
Another under-construction tower won the second-largest lease of 2022 when SL Green secured investment manager Franklin Templeton for 15 years at One Madison Avenue.
The 1.4M SF Flatiron redevelopment, which will also feature two French food concepts from chef Daniel Boulud and a 55K SF Chelsea Piers Fitness, topped out this month. Its office space was asking roughly $145 per SF when Franklin Templeton signed the deal in September, a spokesperson for SL Green told Bisnow.
The redevelopment is being financed with a $1.25B construction debt package, and SL Green brought in Hines and the National Pension Service of Korea as equity partners. One Madison will have a glass-covered tower on top of its 19th-century limestone facade by the time it’s finished in 2023, the New York Post reported at the time.
One Madison also signed this year’s third-biggest lease, signing multinational tech company IBM for nearly 330K SF as the building’s anchor tenant in March. The 16-year lease will give the tech company portions of the second and seventh floors, as well as the entirety of the eighth, ninth and 10th floors for 16 years.
Building: 620 Eighth Ave.
Size: 330K SF
In the largest second-generation lease of the year, IT firm Datadog signed a large, direct expansion lease in a building where it had subleased nearly 32K SF six years ago.
Datadog will take over the spaces of Clearbridge and Goodwin Procter, which occupy 27.2% and 8.5% of the building, respectively, and are moving out next year, according to a Fitch Ratings report on the building's CMBS loan. Datadog is taking 45% of the rentable area, bringing Brookfield's 736K SF portion of the building to 99% occupied, per Fitch.
The 52-story office building was developed in 2003 for the newspaper by Forest City Ratner and was taken over by Brookfield when it acquired Forest City in 2018. The Times owns its portion of the 1.3M SF tower.
D.E. Shaw & Co.
Building: Two Manhattan West
Submarket: Hudson Yards
Size: 283K SF
Two Manhattan West also scored this year's third-biggest lease, signing the hedge fund for an eight-floor lease in September, Bloomberg reported at the time. The firm, which managed around $60B in June this year, plans to move from its 1166 Sixth Ave. address in 2024.
Brookfield committed to building the 62-story tower, costing an estimated $2B, without any leases signed in 2019. Despite the pandemic gradually suffocating Manhattan’s office market in the time since, the project’s leasing was timed perfectly to capture the so-called flight to quality. After signing law firm Crowell & Moring LLP to a 71K SF lease earlier this month, it is now 76% pre-leased, according to Brookfield.
Building: 1120 Sixth Ave.
Landlord: Edison Properties
Size: 248K SF
In a year where the labor market stayed tight and jobs stayed strong, online jobs posting site Indeed decided to stay put, renewing and expanding its office at 1120 Sixth Ave.
Indeed initially leased 125K SF in the 1939-built tower known as the Hippodrome Building in 2015, but grew its footprint in a renewal/expansion deal to 248K SF in July.
Owner Edison Properties acquired the building in 1978 and placed it under extensive renovations from 2006 to 2014, resulting in a new glass curtain wall, a two-story lobby finished in marble and limestone, and all-new building infrastructure, according to the property’s website.
Building: 601 Lexington Ave.
Submarket: Midtown East
Size: 200K SF
Landlord: Boston Properties
Blackstone didn't just beef up its real estate holdings through its private real estate funds in 2022, it also expanded its Midtown office. In April, the firm signed for an additional 200K SF, bringing its footprint in the Boston Properties-owned 601 Lexington Ave. to 330K SF.
The deal is part of Blackstone’s quest to grow its office space in Manhattan to 1.5M SF as it expands its workforce, and came on the heels of Boston Properties’ 2021 $1B refinancing deal on the 59-story office tower. Blackstone is headquartered nearby at Rudin Management's 345 Park Ave.