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title: A Real-Time Office Narrative | Noah & Co. Monthly 📰
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Midtown Office Space Update: January 2023 - Landlords becoming more desperate as companies increased leverage is bringing employees back

| View in browser       January 2023 A Real-Time Narrative We connect with Midtown business executives daily to probe and hear anything and everything related to their office space. In that vein, I wanted to share several of the questions, comments, and concerns that we frequently hear and discuss, along with our guidance:   "My landlord offered a great deal to renew our lease at the current rate." Pause. Understand that a "great deal" without a strong understanding of your market alternatives leaves money on the table. A great deal comes when you have the ability to consciously and proactively decide on the option that works best. We are at the point in the office market cycle where there are Landlords who will be more competitive for your tenancy. Whether you choose to relocate or not, having the right benchmark for the market is critical for truly getting a "great deal."   “We aren't sure how/when our people are going to come back to the office.” Short of a major market shift, current office utilization levels are likely going to remain for the foreseeable future. We’re three years into this new paradigm and you should probably not expect any stark changes to your employees WFH, hybrid, or in-office preferences. In other words, assume the status quo.   “We're not using the office as expected and want to explore an exit.” In today's market, subleasing your space will be the go-to option 90% of the time, although there are three points that you should be aware of if considering this route: You will likely take a significant loss to offload the space It's equally as important to prioritize the credit-worthiness of a subtenant as much as the rent you will receive The first offer you receive will often be the strongest “What is the asking rent for office space at 'X' Building?” Since the start of the pandemic, the discrepancy between a building's asking rent and the rent a landlord will accept for a new deal has been quite disparate, due in many parts to the industry's notorious lag in pricing to market and price discovery. The tide may be starting to turn though - beginning in the second half of 2022, we’ve gotten much closer to price discovery in the holdout buildings, as it's become too painful and expensive for the charade to continue.   "It must be tough in the office leasing space. How is your business doing?" While it may seem counterintuitive, times of extreme volatility offer opportunity in our business as a major catalyst for companies to reevaluate their space needs and spend. We were fortunate to complete a company-record number of transactions in 2022. These deals ranged from securing a coworking desk for a 1-person startup, to assisting a 100-person organization secure a long-term lease for their midtown HQ, and many others in between.   Until next month, Ben Ben Blumenthal Principal Broker \| Noah & Co.   P.S. - I recently had the opportunity to drop a thought on the office space market in the Washington Post; you can check out the article here.    The Best of January    As companies continue to gain leverage in their office lease negotiations, many firms have taken the opportunity to lock in space at the markets currently discounted and tenant-friendly terms. Where is the latest action? Midtown Relocations - Pandora locked in a 15-year lease for its new HQ at 1540 Broadway - From Dumbo to Midtown, NYFA will call 29 West 38th St. home for 10+ years - AI firm WorkFusion is relocating from Wall Street to 1450 Broadway Expanding Footprints - Continued growth is bringing Incline Equity Partners to 18k SF at 101 Park - Transmission Developers setting up a second office at 623 Fifth Ave. - A move to 440 PAS will provide Signal AI with double the space Staying Put - Fox & News Corp ink 20-year extensions for their 1.2M SF AoA HQ - 515 Madison's vacancy rate drops with 3 tenants securing new deals - A 10-year renewal will keep REBNY at Feil's 570 Lex    Disney CEO bringing employees back to the office 4 days per week Read On New plan would bring pedestrian-focused upgrades to Fifth Ave. Read On What a "blighted" classification would mean for Penn Plaza Read On A fresh start: 335 Madison rebrands to 22 Vanderbilt Read On What you need to know about the finalized Local Law 97 rules Read On Inside the city's plan to convert office space into 20k new homes Read On Noah & Co., 600 Fifth Avenue, 2nd fl., New York, NY 10020, (212) 947-7120 Manage Preferences |
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