Over 26 million square feet have been leased in 2019 — with more expected to be wrapped by the end of the year.

Just last week, the law firm Akerman signed a 100,000-square-foot deal to move to Mitsui Fudosan’s 1251 Ave. of the Americas from 666 Fifth Ave., which is being redeveloped by Brookfield.

Large blocks are getting absorbed at a rapid rate. Last month, Facebook signed an enormous 1.522 million-square-foot lease at Hudson Yards and, as The Post first reported, is negotiating for another 730,000 square feet at Vornado’s Farley Building. Dentsu, the Japanese firm it bumped from Farley, then leased 320,000 square feet at Tishman Speyer’s Morgan North Post Office.

Amazon finally inked its 335,000-square-foot lease at SL Green’s 410 Tenth Ave. aka 460 W. 34th St. first reported by the Post. Sources say is still seeking more feet.
But despite the large deals, the mood isn’t all celebratory as some companies are implementing hiring freezes. “They only last so long, but it still sends a message,” says one executive.

This adds to underlying worries that the end of the city’s real estate boom is near.

“It’s been steady for so long and that’s when people get nervous,” says David Levy of Adams & Co., who describes the feeling as being like “a deer in headlights.”
Grant Greenspan of the Kaufman Organization has noted the constant “drumbeat” of stories that a recession is looming.

“The fundamentals are sound, however, the emotional factor and the news broadcasters pushing the recession is spooking people [in companies who lease space] to delay their decisions,” Greenspan explains. “This emotional wishing for a recession and wishing for negativity and for events to happen weighs on decision-makers.”

The local real estate market is similar to the US economy, Peter Riguardi of JLL observes. “There are more people working in America than ever before,” he says. “People say there is a huge run [that will continue].”

 L&L Holding Company completely rebuilt 425 Park Ave. taller and with a new lobby.
L&L Holding Company completely rebuilt 425 Park Ave. taller and with a new lobby.Visualhouse

But brokers are noticing an imbalance in available property.

Despite 46 million square feet being “available” to lease in Manhattan within the next year alone — for context, that’s equal to all the office space in Dallas or Los Angeles and “an enormous amount of space,” per John Maher of CBRE — not all of it is properly priced or desirable.

Maher calls Third Avenue “one of the better value plays.” Just like Sixth Avenue, it has gone through a renaissance of redevelopment and releasing, so he and others believe Third is next.

Jeffrey Peck of Savills, who only represents tenants, notes 32 percent of the available space is in large blocks — 83 in Manhattan over 100,000 square feet — up from 27 percent a year ago. Fifty-six percent of the space is due to tenants that are vacating — and mostly relocating to new towers.

But as iconic locations become available, there is a flight to quality as tenants can now rent prime spaces, such as the rarely available top floors of towers, adds Peck.

The Olayan Group and RXR are redeveloping 550 Madison Ave. with new public gardens.
The Olayan Group and RXR are redeveloping 550 Madison Ave. with new public gardens.Snøhetta and MOARE

For instance, the Olayan Group and RXR’s 550 Madison Ave. — the former Sony Building — is vacant and being entirely reimagined with stunning new public gardens designed by Snohetta and a new lobby by Gensler.

And after the relocation of law firm White & Case, the top of the Durst Organization’s 1155 Ave. of the Americas is available, while RFR’s Seagram Building at 375 Park Ave. has over 200,000 square feet to rent because Wells Fargo is moving to Hudson Yards.

While some companies are growing, they can still lease less space than in the past due to open-plan office concepts. “The previous 275 [square feet] per person is now down to even 165 with desk sharing and open landscaping,” says Gordon Ogden of Byrnam Wood.

But a lot of office space sports asking rents that are just too high. The average Class A rent is now $97.01 per foot, Savills says, with the average asking rent at $82.04 per square foot, both up from last year’s $85.73 and $75 per square foot respectively. Inventory has also risen 8.8 million square feet to 452.3 million square feet — with the new space in high-tech structures.

Along with the re-invention of 550 Madison and 425 Park Ave., there are new towers in Manhattan West and Hudson Yards as well as the Spiral at 66 Hudson Blvd. and the upcoming 3 Hudson Blvd., where Riguardi is the leasing agent for Boston Properties and the Moinian Group.

Among the year's biggest deals, Dentsu leased at Tishman Speyer's Morgan North Post Office project.
Among the year’s biggest deals, Dentsu leased at Tishman Speyer’s Morgan North Post Office project.Tishman Speyer

“There are a lot of prospects and a lot of activity and the option to customize this building,” he says of the new tower.

Many owners are therefore sweetening the sticker price. “The landlords that are making investments — and are energy efficient, and trying to create a live-work balance by amenitizing and curating experiences and improving elevators and HVAC — are doing fine,” says Riguardi.

Some are also “buying down” the rents with large work letters, tenant improvement allowances and free rent periods, plus giveaways like signage and after-hours HVAC, all while retaining “face” rents. This can add up to as much as “an unprecedented” three years of rent. Peck adds: “This is truly a unique time to negotiate.”

There is also an “amenity war” as owners create bespoke spaces like conference centers, food trucks, concierges, gyms, outdoor spaces and roof decks. “It used to be that we would point to the local Starbucks,” Peck adds. “Now it is a determining factor as to what building a tenant goes to.”