As the 2023 Manhattan office market wobbles volatilely, with increasing availability and shrinking corporate footprints, some landlords have a minimum of something to rejoice: a record number of recent leases signed for greater than $100 per square foot.
According to a latest study by JLL, 190 leases were concluded within the C-note club in 2022, in comparison with 164 in 2021.
According to JLL’s 12 months summary, leases signed for $100 and more per square foot totaled 6.1 million square feet, greater than double the premium signed in 2021.
The report from JLL Vice President Cynthia Wasserberger, who worked with colleagues Carlee Palmer and Margaux Kelleher, cites a lot of staggering statistics:
- The unprecedented fifteen deals totaling 280,000 square feet had initial rents of over $200. At SL Green’s One Vanderbilt, two different smaller leases have reached $300 per square foot.
- Leasing was dominated by “escape to quality” removals to brand latest towers and to older, significantly modernized ones. In fact, 62% of the most costly latest leases were for such properties.
- The owners with essentially the most premium rent tenants were Brookfield Properties with 16 deals totaling 1.6 million square feet; SL Green with 17 deals for 842,000 sf; Companies related to 11 deals for SF703,000; and RFR Realty, which closed 19 deals for SF386,000.
JLL didn’t name specific tenants within the $100 and over club. But mega deals reported in 2022 included GFL Environmental at SL Green’s One Vanderbilt; IBM in SL Green’s One Madison; Global Relay UA at Durst Organization’s 1155 Sixth Ave.; Vista Equity Partners at 50 Hudson Yards affiliate and PDT and Deutsche Bank at Deutsche Bank Center affiliate at Columbus Circle.
Not every skyrocketing lease was for less space than the previous tenant, but all of them reflected the overwhelming ‘flight to quality’ that offers A-plus property owners an enormous advantage over the remainder of the industry.
Wasserberger called the premium rental boom “further evidence of the resilience and importance of prime real estate available on the market.”
“Many tenants have opted to purchase high-end space as they give attention to aligning their post-COVID business,” said Wasserberger.
“Right size” normally means downsizing. A classic case from 2022 was KPMG’s 450,000-square-foot lease at Brookfield’s Two Manhattan West. The 12 months’s largest single latest lease actually meant a lack of 350,000 square feet from KPMG’s current three locations.
However, it shouldn’t be known how much the corporate pays for the brand new excavations.