Last year was one of reckoning for Manhattan’s office market.
After an underwhelming post-Labor Day return to the office, workspace occupancy remained below where many of the city’s landlords would like it to be. Leasing activity ground to a halt at the end of the year, with fourth-quarter figures down 43 percent from a year earlier.
Still, there were bright spots, particularly for owners of new construction projects.
Brookfield’s Two Manhattan West, SL Green Realty’s One Madison Avenue and Tishman Speyer’s Spiral in Hudson Yards were among the new office towers that inked the year’s most-valuable leases, as measured by the total rent that will be paid over the terms of the deals.
The year’s 10 most valuable leases totaled an estimated $6.8 billion, according to data from CompStak. That’s up significantly from $3.8 billion the year before, but still down from the pre-pandemic total of $7.85 billion in 2019.
1. Fox Corp./News Corp. | 1211 Sixth Avenue | High $70s/Mid $80s/Low-to-mid $90s psf | $1.9 billion*
Here’s one way to make a mega deal: Take a large footprint and extend it for another two decades.
That’s what Ivanhoe Cambridge did with Rupert Murdoch’s Fox Corporation and News Corporation at its 45-story 1211 Sixth Avenue across from Rockefeller Center. The media tenants renewed their combined 1.1 million square feet for the next 20 years — committing to a long-term presence in Midtown.
Murdoch had previously toyed with the idea of relocating his media empire to the Financial District to anchor Larry Silverstein’s planned 2 World Trade Center. But in 2017, Fox and News Corp. decided to stay put at their Sixth Avenue space for another five years.
As part of last month’s 20-year extension, Ivanhoe Cambridge agreed to make renovations to the 1970s-era skyscraper.
2. KPMG | Two Manhattan West | Low $100s psf | $1 billion
Leave it to the bean counters to explain how signing one of the year’s most expensive office leases is actually a money-saver.
Big Four consulting firm KPMG looks to be the prototype for the hybrid work model: In its move to 450,000 square feet at Brookfield Properties’ Two Manhattan West, the company is reducing its office footprint by more than 40 percent.
KPMG had been looking for a new headquarters since 2018. But it didn’t decide to reduce its square footage until the pandemic led it to adopt a hybrid model.
Now Brookfield’s gain is a challenge for competing landlords. KPMG is leaving behind roughly 350,000 square feet at three buildings: 345 Park Avenue and 560 Lexington Avenue, both owned by Rudin Management, and SL Green’s 1350 Sixth Avenue.
KPMG, which signed a 20-year lease covering floors 13 through 24, plans to move into the new tower near Hudson Yards in 2025.
3. Franklin Templeton | One Madison Avenue | High $130s/Mid $140s psf | $698 million
The year’s third most expensive lease continued the trend of tenants being dazzled by new Midtown office towers.
Asset manager Franklin Templeton signed for 347,000 square feet at One Madison Avenue, SL Green’s new development rising above Madison Square Park.
Franklin Templeton will occupy floors 11 through 22 on a 15-year lease, joining IBM (seventh on this ranking), Chelsea Piers Fitness and celebrity chef Daniel Boulud as tenants in the tower, which SL Green expects to complete later this year.
4. HSBC | 66 Hudson Boulevard | Mid $90s/Mid $120s psf | $560 million
HSBC is leaving its namesake Midtown office tower for Hudson Yards.
The London-based bank signed for 265,000 square feet at Tishman Speyer’s Spiral tower at 66 Hudson Boulevard, between 10th and 11th avenues. The bank will relocate from its current headquarters at 452 Fifth Avenue near Bryant Park, previously known as the HSBC Tower.
Similar to previous deals on this list, HSBC chose the “flight to quality” path from an older building to new construction and is downsizing its footprint. The company occupies about 548,000 square feet at 452 Fifth Avenue, meaning its new offices are roughly half that size.
5. D.E. Shaw | Two Manhattan West | Low $140s psf | $558 million
Brookfield’s Two Manhattan West makes its second appearance on this list with a 283,000-square-foot lease with investment firm D.E. Shaw.
Contrary to the downsizing trend, though, D.E. Shaw appears to be growing its footprint. As of 2018, the company was reportedly occupying 200,000 square feet at Minskoff Equities’ 1166 Sixth Avenue.
Brookfield expects the 58-story, 1.9 million-square-foot tower to be completed later this year.
6. KKR | 30 Hudson Yards | Low $170s psf | $552 million
Facebook parent Meta Platforms has, understandably, been watched closely as an indicator for the state of the office market.
So when the company in November opted not to renew roughly 250,000 square feet at the Related Companies’ 30 and 55 Hudson Yards, the move caused concern that Big Tech was no longer around to prop up new developments.
Some of that concern was eased when KKR stepped in and took about 220,000 square feet of that space in 30 Hudson Yards, where the private equity giant already occupies more than 300,000 square feet.
7. IBM | 1 Madison Avenue | Mid $90s/Low $100s/Mid $140s/Low $220s psf | $518 million
SL Green’s One Madison Avenue gets a second showing with a 328,000-square-foot lease signed by IBM.
The tech company will get its own exclusive lobby entrance and will consolidate employees from 10 other offices in the city.
IBM’s deal spans 16 years and covers portions of floors two through seven, full floors eight through 10 and part of the ground floor.
8. Mutual of America | 320 Park Avenue | Low $70s psf | $398 million
They say there’s nothing like a live-in landlord.
Mutual of America Financial Group has owned 320 Park Avenue for more than 25 years and occupied 252,000 square feet in the building. But after selling a 25-percent stake in the tower last year, it became a rent-paying tenant on a long-term lease.
The deal coincided with another tenant, investment-manager Pzena, doubling its space to roughly 80,000 square feet. The tower completed capital improvements costing between $35 million and $40 million, including a new lobby, barista stand and fitness center.
9. Touro University | Three Times Square | Low $40s psf | $383 million
Touro University is consolidating several schools across the city into roughly 243,000 square feet at Rudin Management’s Three Times Square.
The university will get its own private entrance in the 30-story tower and will build a library, classrooms, laboratories and event spaces. The floors will be connected with new internal staircases to create a sense of community for the school, according to university executive Jeffrey Rosengarten.
Rudin CEO Bill Rudin said it was “definitely out of the box” to bring a university into an office building mostly known for banking and law tenants, adding that his firm is “calling audibles” in the post-pandemic leasing environment.
10. Tiffany & Company | 200 5th Avenue | Low $110s psf | $315 million
All that glitters isn’t gold for landlords.
L&L Holding Company signed Tiffany & Company to one of the year’s most-expensive deals. But the jeweler shaved off almost a third of its footprint with the 287,000-square-foot lease.
The landlord recently completed $135 million worth of upgrades to the Midtown South building and will look to draw tenants to the first availability since the improvements were completed.
*Full details of the Fox Corporation and News Corporation lease renewals were not available at the time of publishing. Compstak’s estimates are based on a range of rental rates provided but the final value of the leases may vary from these figures.