As job growth and economic stability led to the best year for Manhattan leasing since the turn of the century, brokers and building owners are confident about the future as they head into 2019.
In Manhattan below 65th Street, Colliers International found leases were inked for 41.75 million square feet, up 12.7 percent year-over-year.
Manhattan’s average asking rent overall was $75.90 per square foot, Colliers reported, with a 9.5 percent vacancy rate — the lowest in three years. And for the first time, CBRE — which only counts deals in larger buildings — found average asking rents in Midtown South at $81.48 per foot topped Midtown’s at $78.37 per foot.
“On the agency side, it was vibrant, and on the tenant rep side, there was a surge at the end of the year and a lot that will continue into the new year,” predicts A. Mitti Liebersohn of Avison Young.
Companies appreciate the depth of the local talent pool, which is being fed by even more people who are flocking here in search of jobs.
“It signals to me that human capital is alive and well in New York,” says Josh Kuriloff of Cushman & Wakefield, who represented Pfizer in its relocation lease to Tishman Speyer’s upcoming Spiral in Hudson Yards. The move will keep 2,500 jobs in New York.
The industries making last year’s commitments were diverse. They ranged from pharma giant Pfizer’s sale-leaseback of its East 42nd Street headquarters and eventual move to the Spiral to social media firm Facebook’s expansion at 770 Broadway to tech titan Google’s acquisition of Chelsea Market at the same time it tees up a future 1.7 million-square-foot campus at 315 and 345 Hudson St. and at Oxford Properties’ upcoming St. John’s Terminal expansion at 550 Washington St.
Disney’s announcement of the sale of its Upper West Side office to Silverstein Properties and the future development of a new headquarters at 4 Hudson Square is prompting new looks at that area, says Alice Fair of CBRE. International tenants are savvy, she says, and know the difference between Hudson Yards and Hudson Square.
“We are still seeing big demand from tenants to move,” says Peter Turchin of CBRE, who is observing fewer renewals. “People are trying to reposition their companies and are willing to move and spend capital to do it.”
In a lease for 526,552 square feet signed in early January 2019 through a Newmark Knight Frank team led by Brian Waterman, New York City Health + Hospitals will consolidate at the former 7 Hanover Square with a new address of 50 Water St. The building is being reinvented by GFP Real Estate and the Northwind Group.
Financial giant JPMorgan Chase’s commitment to redevelop 270 Park Ave. while moving its headquarters’ staff to multiple locations set off an area leasing frenzy.
And, of course, Amazon wants to settle in Long Island City — starting with its lease for 1 million square feet at One Court Square.
“They are going to totally transform Long Island City and the offices around there,” says Jared Horowitz of Newmark Knight Frank, who predicts other relocations to LIC. “Other companies want to be near great companies.”
As firms compete for talent, Fair adds, they will have to spiff up their offices.
Brokers must first understand the businesses, explains Matt Barlow of Savills Studley. “We do months of consulting before we go out and look at space.”
Kuriloff says satisfying the office pecking order used to be about “the size of my office and my colleagues’ offices.” Now, he adds, it’s about amenities. And while businesses aren’t completely jettisoning open-plan layouts, they are adding private options for non C-suite workers like more lounge areas and cozy corners where employees can cuddle up with their laptops and headsets in private.
The firms are also creating open center staircases between multiple floors to encourage the chance meetings and exchanges of information that boost the out-of-the-box thinking desired by innovative companies.
Barlow says buildings that promote a healthy indoor environment with the latest “Well” certifications have also become popular over the last year. “LEED is out and Well is in,” he declares. “They do this by getting focused on wellness with mediation rooms, fresh air and green walls.”
Those firms with outdoor access are adding better-designed seating areas, greenery and Wi-Fi, he adds.
Companies now encourage employees to use these areas as extensions of their desks so that sitting outside doesn’t become a guilty pleasure or mean a desk jockey is slacking off.
