As Manhattan’s office market wobbles unceremoniously into 2023, with rising availability and shrinking corporate footprints, some landlords have at least something to celebrate: the number of new leases signed for more than $100 per square foot. record number.
The year 2022 sees 190 leases in C-Note Club, up from 164 in 2021, according to a new survey by JLL.
According to JLL’s year-end recap, leases signed at $100 per square foot totaled 6.1 million square feet, more than double the amount of premium-priced floor space signed in 2021.
The report by JLL vice-chairman Cynthia Wasserberger, who worked with colleagues Carly Palmer and Margaux Kelleher, offered several startling statistics:
- An unprecedented fifteen transactions for a total of 280,000 square feet had starting rents in excess of $200. At One Vanderbilt at SL Green, two separate short leases hit $300 psf.
- Leasing was dominated by “quality flight”, with new towers and older ones that were significantly upgraded. In fact, 62% of prized new leases were in such properties.
- The landlords that landed 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; Related Companies with 11 deals for 703,000 sf; and RFR Realty which closed 19 deals for 386,000 sf.
JLL did not name specific tenants in the $100-and-up club. But mega-deals reported in 2022 included GFL Environment at One Vanderbilt on SL Green; IBM at One Madison at SL Green, the Durst Organization’s Global Relay UA at 1155 Sixth Avenue; Vista Equity Partners at Relat K 50 Hudson Yardsand PDT and Deutsche Bank at the relatable Deutsche Bank Center at Columbus Circle.
Not every sky-priced lease was for less space than a tenant, but all reflected the enormous “quality flight” that gives owners of Class A-plus properties a huge advantage over the rest of the sector.
Wasserberger called the premium-lease boom “further evidence of the resilience and relevance of top-of-the-market properties.”
“Many tenants chose to commit to high-end space while focusing on right-sizing their operations post-Covid,” Wasserberger said.
“Right-sizing” usually means downsizing. Was a classic 2022 affair KPMG leases 450,000 square feet at Brookfield’s Two Manhattan West, The largest single new lease of the year actually represents a loss of 350,000 square feet from KPMG’s existing three locations.
However, how much the firm is paying for its new dig is not known.