Money managers are making waves with office leases, but even their deep pockets aren’t enough to pick up the beleaguered market.
Hedge funds and investment firms are embracing office space in Manhattan, unlike many other companies that are retreating, Bloomberg reported. Financial services firms, insurers, private equity, hedge funds and asset managers accounted for 35 percent of new leases in the past two years by square footage, according to Savills Research.
As equity markets rose in 2020 and last year, so did the fortune of many money managers, allowing them to increase hiring. Many of these companies are looking for space that appeals to employees.
“With the market as it currently stands and the vacancies, they’re using it as an opportunity to grow and provide great environments for their employees to continue to attract and retain talent,” Brookfield Properties executive Callie Haines told the publication.
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Blackstone, for example, has been eyeing options to either expand at 345 Park Avenue or move. The private equity firm is reportedly looking for 1.5 million square feet.
Asset manager Wellington Management is opening its first outpost in the city, looking to cater a staff that could grow from fewer than 100 employees to between 400 and 500. The company is planning to take four floors at Columbia Property Trust’s 12-story boutique office building at 799 Broadway.
And yet, all the money managers in the world don’t appear to be enough to cork the office sector’s losses. According to Savills, about 90 million square feet were available to rent in the first quarter, but leases for only 7.7 million square feet were signed.
Sublease availability is still rising, too. Across the country, it grew 3.6 percent to 159 million square feet in the first quarter, according to CBRE. In Manhattan, more than 20.2 million square feet of sublease space was available.
[Bloomberg] — Holden Walter-Warner