Comedian Jerry Seinfeld is having the last laugh. New York is back in business. During the pandemic, when The New York Times published an article questioning if New York was over, Seinfeld hit back at the hand-wringing skeptics with a Times article of his own, “So You Think New York Is ‘Dead’ (It’s not).” He was right. Recent numbers show that the Big Apple’s commercial real estate numbers are back to pre-pandemic levels as workers return to the office en masse, breathing life into surrounding businesses and residential real estate.
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The Squeeze For Leases
The New York Post reports that several major companies have difficulty finding office space. It cites Singapore-based sovereign wealth fund Temasek, which leases 27,000 square feet at the Seagram Building at 375 Park Ave. and wanted to expand its footprint but could not. This pattern is cropping up throughout the city, with commercial data and analytics companies unable to keep up with the pace of lease fillings.
Bryant Park Corporation president Dan Biederman told The Post: “Almost all of the landlords in our area are telling prospective tenants, ‘Sorry, we have no space left.'”
Commercial real estate broker and the CEO of the New York Tri-State Region of CBRE, the world’s largest commercial real estate services firm, Mary Ann Tighe said on a recent podcast, “If you are a tenant of 100,000 square feet or greater, you should have done your deal already. By the time we get to 2027, you’re going to have a problem.”
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To emphasize the situation, Tighe said that of the 2.4 million square feet of new commercial space to be completed by the end of 2026, 79% is already pre-leased. The numbers are not affected by rental conversions of older buildings into residential ones because, as outdated spaces, they were not suitable for modern offices.
Cushman & Wakefield broker Mark Weiss stated: “Some tenants have a false perception that the market’s open, there’s nobody in the offices – but in fact, it’s tighter than it was in 2019.”
WeWork Dominates Splashy Commercial Real Estate Deadlines
Recent splashy commercial real estate headlines have been filled with news of major Manhattan tenant leases. Among the most eye-catching was WeWork and Amazon partnering on a deal for over 300,000 square feet at 330 W. 34th St. Amazon’s back-to-work mandate for its employees has seen the giant tech company fill space throughout New York City at other WeWork locations, including at 1440 Broadway, a few blocks south of Times Square. Amazon also has office space at Brookfield Properties’ Five Manhattan West at 450 W. 33rd St., which occupies more than 285,000 square feet, according to CoStar data.
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“This collaboration underscores our commitment to sustainable growth and meeting the diverse needs of our clients where they need us most,” the WeWork spokesperson told CoStar News, adding the property is located in “one of the city’s most dynamic and rapidly evolving” commercial hubs.
Law firm Ropes & Gray’s 430,000-square-foot lease at 1285 Ave. of the Americas last month marks one of Manhattan’s largest office leases this year.
Tech’s Titanic Manhattan Office Footprint
Tech is all over New York. Apple expanded to nearly 398,000 square feet at Penn 11. At the beginning of 2024, Google opened its $2.1 billion office at St. John’s Terminal. Bloomberg LP recently signed a renewal and expansion lease at SL Green Realty Corp.’s 919 Third Ave., a 1.5 million-square-foot, 47-story office tower in Manhattan, bringing its footprint to 924,876 square feet at the high-rise. As of May 2024, Bloomberg occupied 2.1 million square feet of Manhattan office space.
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Return To Work
The return-to-office mandate implemented by many major companies is spurring the headline-grabbing Manhattan office deals. Amazon’s C.E.O. Andy Jassy recently demanded that all employees return to the office five days a week. At the same time, execs at other companies, such as JPMorgan Chase’s Jamie Dimon and Goldman Sachs’s David Solomon, made a similar decision.
“Clearly a return to office mentality is bringing a lot more people back and forcing some of these existing tenants to come back into the market where they had laid off space because they thought they were going to have a more robust hybrid work environment and now they’re bringing the bodies back,” Steven Durels, SL Green executive vice president, said on the company’s third-quarter earnings call in October.
Full offices have allowed small businesses in Manhattan to make a roaring trade after years in the doldrums following the pandemic, including many food delivery services.
“Over the past two years, over 400 new businesses have started in Chinatown and Two Bridges, helping to create almost 3,000 jobs,” said Melissa Pumphrey, with New York City’s Economic Development Corporation.
There has also been a surge in residential leases in Manhattan and home prices in cities nationally as RTO mandates kick in, forcing workers to leave rural areas and the suburbs.
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