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August 2023

Momentum & Misery: A Tale of Two Buildings

As the summer comes to a close, many of the trends in the Midtown Manhattan office market have come into clearer focus:

I. Class A Competitiveness

Amidst a sea of available office space, true Class-A midtown buildings are proving their mettle. These well-located buildings featuring updated amenities and quality space maintain their competitive edge as a beacon of stability and a magnet for premium paying tenants.

II. Lease Momentum

On a positive note, the office leasing landscape in August showed signs of promise, with a prime example being RXR's announcement of signed leases exceeding 1 million square feet. Despite challenges, leasing activity has reinforced the tenant demand for well-positioned office space resiliency in the market fueled by an enduring belief in the centrality of office space to an organization’s success.

III. Vacant Space Challenges

While certain properties thrive, vacant space in uncompetitive building continues to face challenges. Whether due to a prohibitive capital stack or stakeholder objections, many of these older buildings continue to resist repricing to match market realities prolonging their irrelevance as office spaces. Adapting to the market demands is essential for these spaces to support a value that is greater than the dirt underneath it.

IV. Back to the Office Push

Since 2020, there has been a consistent rhythm of Labor Day and New Year announcements of “new in-office policies” - and so it continues as employers try to reaffirm their commitment to in-person work experiences. While a consistent 3-day in office work week seems to have gained traction, many are now trying to push for a fourth day.

As we continue to observe these evolving trends, it's clear that the NYC office landscape is a blend of challenges and opportunities. The triumph of Class-A buildings, the leasing momentum exhibited by RXR, the hurdles faced by vacant spaces, and the ongoing evolution of the hybrid work model all represent NYC’s ability to absorb and adapt to change

Stay tuned for more insights and we look forward to sharing updates as your Midtown office boots on the ground.

Until next month,

Ben

Ben Blumenthal
Principal Broker | Noah & Co.

P.S. - we recently took to the streets of NYC with some non-traditional marketing.
Check it out here

The Best of August

A continued push by many large corporations to return to the office (the most recent being Goldman Sachs) has led to NYC outpacing the majority of other cities in weekly office occupancy. To accommodate their employees, Midtown firms have remained busy locking in new deals.

So where's the latest action?

A Spot to Park

- Hedge fund BlueCrest Capital will call 450 Park home for 15+ years
- ERM doubled its space with an 8-year lease at 277 Park
- Insurance broker NFP relocating its HQ to the MetLife Building
- Vera Wang will open at 25k+ SF showroom at 500 Park

Best of the West

- JIBEI is set to open a new 30k SF training center at 1293 Broadway
- Law firm Capell Barnett relocating to 15k SF at 14 Penn Plaza
- The Spiral hits 75% leases as Tishman Speyer inks 3 new deals
- Ad-tech platform Sprinklr making the move to 441 Ninth Ave.

If it Ain't Broke...

- Cleaning company MevRam renews and expands at 320 Fifth
- Nonprofit ADA renewed its 307 West 36th St. office for 5 years
- David Polk & Wardwell inks NYC's largest lease of 2023 at 450 Lex