They won’t top out until the end of the decade, but iconic new Manhattan office towers are finally going vertical.
And no wonder: Asking rents for beautiful, technologically advanced office space in prime locations are soaring toward $200 per foot.
Meanwhile, the success of JPMorgan Chase’s glamorous new headquarters at 270 Park Ave. is serving as proof of concept for ambitious new skyline stunners.
JPMorgan Chase’s 270 Park addy dazles the skyline. Luiz C. Ribeiro for New York Post
“It is creating a buzz about how transformative new construction is to the city,” said David Goldstein of Savills. “The new construction pipeline is definitely taking shape and the first out of the ground will have pricing and timing advantage.”
One of the earliest will be BXP’s 343 Madison Ave., designed by KPF, with 937,000 square feet. It has a letter of intent with C.V. Starr for a third of the 46-story tower, which won’t be delivered until 2029.
Another new office with the 2.9 million square feet is planned at 175 Park Ave. RXR/TF Cornerstone
Not to be outdone, Scott Rechler’s RXR and TF Cornerstone are talking to anchor office tenants for their jumbo 2.9 million-square-foot tower at 175 Park Ave. Designed by Skidmore, Owings & Merrill, it would rise 1,575 feet above Grand Central Terminal and include a Hyatt hotel and transit improvements.
Vornado and Rudin are also in the game. They just got city approval to build a new 1.7 million-square-foot tower at 350 Park Ave. — with Citadel as partner and a 850,000-square-foot anchor space.
And Silverstein Properties is closing in on a deal with American Express to move from Brookfield Place to a new 2 World Trade Center, now likely to be around 2 million square feet.
Ken Griffin has approval to build a tower at 350 Park Ave. Foster + Partners
In a move from Rockefeller Center, Deloitte has agreed to lease 700,000 square feet of Related’s 1.1 million-square-foot 70 Hudson Yards that is now under construction.
Nearby, BXP and Joseph Moinian are inching closer to getting 3 Hudson Blvd. out of the ground.
The reset in asking rents is also drawing investors into the market, spurring a slew of sales.
“Investors are back on the hunt for offices that were labeled as `kryptonite’ for a fair while.”
David Goldstein of Savills
One Vanderbilt’s developer, SL Green, swooped in to pay $136 million for the 800,000-square-foot development site at 346 Madison, where buildings will need to be demolished to kick off construction.
It’s a bargain compared to the entirely vacant 405-417 Park Ave. blockfront between East 54th and 55th streets being marketed by Newmark — with pricing around $500 million — for a potential tower of 700,000 square feet.
Bob Knakal of BKREA is marketing dozens of land sites in Manhattan as well as 17 air rights transfers.
While many of those sites will become condos, some may become offices.
Although 30 million square feet worth of new towers were built over the last decade, it’s nearly all leased up. Jonathan Mazur of Newmark predicts 10 million square feet will rise by 2032 to meet demand — followed by more during that decade.
Some developers are seeking buildings with good bones that can be rehabbed faster than ground-up construction.
“Investors are back on the hunt for offices that were labeled as `kryptonite’ for a fair while,” Goldstein said.
A lease for the entire Chrysler Building is still up for grabs through Savills for landowner Cooper Union. SL Green would like to take charge of that partially vacant iconic Art Deco tower, but other operators are also in the mix.
343 Madison Ave. Volley Studio
Marketed by Eastdil, the $1.08 billion transfer of the IBM Building at 590 Madison Ave. to RXR at the end of the summer provided a boost to the tower sales market. Meanwhile, Norges Bank Investment Management pulled its cash from the ground up 343 Madison Ave. and pivoted to buy 1177 Sixth Ave. with Beacon for $572.29 million. It was marketed by Eastdil for Silverstein Properties and CalSTRS (which paid $1 billion in 2007). The largest tenant is the global law firm HFS Kramer.
“Those sales demonstrated there is institutional demand for New York City offices and reshaped the way people were thinking in a constructive and positive way,” said Will Silverman of Eastdil. “It was an institutional blessing.”
The new pricing also means that lenders, who took control of many assets during the nadir of the pandemic, are finally ready to sell. Other investors are selling to pay down existing debt, or to beef up cash reserves to redeploy into new projects.
RFR offloaded empty offices at 522 Fifth Ave. to Amazon earlier this year. RFR
For instance, Tishman Speyer is selling the lower 22 stories of CitySpire at 150 W. 56th St. with 370,000 square feet of offices.
“We are through the bottom and pricing is increasing but it is still down 30% to 40% from the peak,” said Andrew Scandalios of JLL.
Driven by a debt of $262.5 million, Rockwood and lender MetLife are trying to sell 2 Grand Central at 140 E. 45th St. They’re looking for north of $270 million with brokerage Eastdil — a discount from the $401 million paid in 2011.
“Sales demonstrated there is institutional demand for New York City offices and reshaped the way people were thinking in a constructive and positive way … a blessing.”
Will Silverman of Eastdil
The debt on the vacant 137,000-square-foot 90 Fifth Ave. is also for sale through Newmark.
Debt is one reason Charles Cohen sold the 382,500-square-foot office tower at 623 Fifth Ave. to Vornado for $218 million. It’s 75% vacant and Vornado will pour millions into the building to capture tenants who want to move in 2027.
BKREA and Rudder Property Group are selling the fully furnished former Core Club condo at 65 E. 55th St. for RFR for $40 million.
Across the street, Park Avenue Tower at 65 E. 55th St., marketed by Eastdil for Blackstone, is being sold to SL Green for $730 million.
RFR sold the vacant offices at 522 Fifth Ave. to Amazon earlier this year for $340 million plus another $85 million for its retail space.
“It’s a strong example of the lack of supply of big-block space,” RFR’s Gaby Rosen said. “They wanted to move from older, under amenitized properties.”