The developer of the country’s most valuable office tower is on the hunt.
SL Green has been checking out development sites for a project that would be on par with its One Vanderbilt or One Madison Avenue.
“We’re tracking many,” CEO Marc Holliday said at the company’s investor day in January. “We’re close on some and we hope to be able to put one under contract.”
It’s a sign of the times: After the work-from-home hit to the office market and rising interest rates brought the pipeline of new Manhattan office space to an all-time low, developers are suddenly ramping up to build the glitzy, high-end offices that deep-pocketed tenants are clamoring for, though by the time their demands get met, it could be 2030.
RXR and TF Cornerstone are expecting that their 175 Park Avenue — the heir apparent to SL Green’s One Vanderbilt — will land an anchor tenant and break ground this year. BXP (formerly Boston Properties) has a similar timeline for its planned office tower on the site of the Metropolitan Transportation Authority’s former headquarters at 343 Madison Avenue.
And Vornado Realty Trust and Rudin recently kicked off the public review process for 350 Park Avenue, their Citadel-anchored skyscraper, where they’ll seek to start construction next year.
There are a handful of prime development sites that could hold Manhattan’s next cloud-busting commercial tower.
The Pakistani government recently tapped JLL to market the Roosevelt Hotel at 45 East 45th Street, just north of Grand Central Terminal. The site could be developed into a roughly 1 million-square-foot tower.
Developers might also eye a pair of properties at 405-417 Park Avenue, spanning the full block front on Park between East 54th and 55th streets. The city also identified nearly 40 sites that could sprout new towers when it rezoned Midtown East in 2017.
For any project to move forward, the developer must first land an anchor tenant. The next step is to find financing, which can prove to be an even bigger challenge.
Interest rates need to come down and inflation brought under control for funding to flow, Darcy Stacom of Stacom CRE said. The Trump administration’s enacted and potential tariffs complicate that.
Still, Stacom said, developers are inserting demolition clauses into leases that would allow them to clear buildings to make way for new towers, a sign they’re getting ready.
“I think there are more [projects] that could move into a more active-mode list,” she said.
Undeterred
SL Green sold a stake in One Vanderbilt last year that valued the tower at $4.7 billion, making it the most valuable office tower in the country and the epitome of the successful 21st-century office tower.
If anything can outdo it this cycle, it’ll be the tower next door.
Scott Rechler’s RXR and TF Cornerstone have plans to erect a 2 million-square-foot office and hotel at 175 Park Avenue.
Rechler is confident. By the end of 2025, he said, he’ll not only have an anchor tenant but will also be starting construction.
“I think we’ll be breaking ground,” he said.
“I think there are more [projects] that could move into a more active-mode list.”
Another project long in the works is BXP’s roughly 1 million-square-foot development at 343 Madison Avenue. That project also needs an anchor tenant, albeit a smaller one.
“I think those folks who can come out of the ground with a really high-quality development will have their choice of high quality tenants,” Hilary Spann, the head of BXP’s New York region, said.
Spann said the big challenge for developers is that the financing market is unsettled, so it can be hard if you don’t have your full capital stack together.
“At 343 Madison, we do [have our stack together] and we’re prepared to move forward as soon as we secure a tenant,” she said.
Silverstein Properties is working on a deal to kickstart 2 World Trade Center. The company is negotiating with American Express to anchor the tower, which Silverstein has been trying to redevelop for most of this century.
It’s not clear what the timeline for the negotiations is.
The other big office project in the works is Vornado Realty Trust and Rudin’s 350 Park Avenue, which is anchored by Citadel.
Bill Rudin said he plans to break ground in 2026.
“We’re working on getting that through the zoning and we’re hoping that gets done by the end of the year, and then in ’26 we can start with demolition and getting that project moving,” he said. “I think with Citadel as a major tenant and partner we’ll be able to get that financing.”
The new new thing
By the time these new buildings open, it’ll be the cusp of the new decade.
The new office buildings that came to define the development boom of the 2010s — One Vanderbilt, Hudson Yards, Manhattan West and 425 Park Avenue — will be approaching 10 years old.
The new buildings are likely to raise the bar again.
David Levinson and Robert Lapidus’ L&L Holdings broke new territory a decade ago with its 425 Park Avenue. In 2015, Citadel took the top of the tower with a lease that, for the first time, crossed the $300-per-square-foot threshold.
SL Green pushed the envelope further in 2021 when it leased a floor at the top of One Vanderbilt to environmental firm GFL Environmental for north of $300 per square foot.
Those were outliers; $200 per square foot used to be the rarefied deal that set the uppermost limits of the market. But those deals are becoming more commonplace: Manhattan saw 48 leases at that price or higher in 2024, the most ever.
By the time 175 Park comes online, the rents seen by 425 Park and One Vanderbilt won’t seem so rarefied, CBRE’s Mary Ann Tighe said.
“The $300 rent will be the new $200.”