Office rental is gaining momentum as the Delta variant recedes and worker bees return to the hive – although many do not yet appear five days a week.
“The second wave was scary,” said Matt Astrachan, vice president of global real estate services firm JLL. “It was the bottom and once we got out of it we saw a big increase in activity.”
This activity – visits, proposals, lease negotiations and signatures – is however always centered on the best new constructions or the class A office towers which have added a lot of equipment.
So far, 42% of rentals through September have focused on 24% of the space, said Paul Myers, vice president of CBRE. “Companies want places where their employees, staff and partners want to come, and present them as a company and show that they are at the forefront of their industry,” said Gregg Cohen, director of the company. Cresa commercial real estate.
As recently described by Mary Ann Tighe, CEO of CBRE, “
New is the new site.”
Tighe markets 550 Madison Ave. reinvented for Olayan, where The Post first reported insurance giant Chubb had a significant 10-story lease pending, with several other tenants looking for other spaces.
This former Sony Tower, between West 55th and West 56th Streets, is still under reconstruction with new dining rooms, amenities and a reimagined walk-through garden atrium.
“People are drawn to towers that have undergone renovations and offer more – like a large amenity space or an urban space downstairs with a food component,” explained David Falk, president of Newmark’s tri-state who is the leasing agent for One World Trade Center, which has amenities and many connected businesses.
The all-new Midtown Tower, One Vanderbilt Ave. of SL Green Realty Corp., which connects to Grand Central Terminal, said Falk, “has performed exceptionally well and tells the whole story because tenants will pay high rent to be there. It’s run like the Four Seasons, and they see the attention to detail like it’s a great hotel.
Falk also cites Brookfield’s 1.8 million square foot open One Manhattan West as “gorgeous” and Related’s upcoming 2.9 million square foot 50 Hudson Yards, slated to open in 2022, as ” extraordinary ”- and both are in the style of a campus. environments related to shopping, dining and wellness experiences.
Just east of these projects, Vornado Realty Trust is adding 100,000 square feet of equipment to the One Penn Plaza base that will serve all of its Penn Plaza tenants, including Facebook, which leased the entire Farley Building at over the new Moynihan train concourse, and Apple at 11 Penn Plaza.
But individual towers also invest capital in massive renovations to attract tenants who want to attract and retain employees.
“The physical space serves as a beacon for the brand,” said David Goldstein, vice president and director of Savills.
Elliott Ingerman, director of Tribeca Investment Group, said his company, which also developed the Baccarat hotel, is investing $ 350 million in the old textile building located at 295 Fifth Ave. to Nomad to transform the pre-war structure into 700,000 square feet. modern offices and commercial spaces.
When it opens to tenants in mid-2022, it will have an enlarged, vegetated lobby and café; a lower level for amenities, a two story vaulted glass penthouse that echoes the three entrance arches, additional elevators and 1,100 new windows.
Nuveen, the investment management arm of TIAA, has redeveloped 730 Third Ave. with Taconic Partners as development advisers, Gensler Architects and Paul Amrich of CBRE at the head of office leasing.
This building reserves the entire second floor for tenant amenities which will include a dining room and fitness center in hopes of attracting tenants to approximately 550,000 square feet on the upper floors. Here, workers will have access to a 7,000 square foot outdoor patio with pergolas providing soft shade.
“There is no more room for generic work environments,” insisted Laurent Lisimachio, principal and design director at Gensler. “You’re competing with someone’s living room, so commercial real estate has to be the place for incredible experiences. “
For example, Marx Realty opted for a hotel vibe with amenity spaces in buildings like 545 Madison Ave. and 10 Grand Central. Both have been recently refreshed with relaxing seating areas.
Resolution Real Estate, owners of the historic 330 W. 42nd St., a blue building that once belonged to McGraw Hill, is investing $ 120 million to modernize the 700,000 square foot property with a new wellness center. be, outdoor terraces as well as conference and event spaces designed by MdeAS Architects and rented by Newmark.
Meanwhile, Taconic Partners has new projects underway that include the boutique refurbishment at 817 Broadway, a life science-focused development with Nuveen at 125 West End Ave. and the Essex Crossing multi-building on the Lower East Side.
In Essex Crossing, two 175,000 and 179,000 square foot office buildings at 145 and 155 Delancey Street, respectively, have outdoor terraces and are located at the base of residential towers with direct connections to the Market Line food hall and to green spaces and are marketed through Cushman & Wakefield.
A “must have”, brokers say, is a flexible conference center, while tenant-only gyms feel “more secure,” as owners not only clean the place but keep track of users.
The Empire State Building has created a “vertical campus” that features a private gym and a future Starbucks Roastery. “It has been modernized for the 21st century with an affordable price – and is the clear leader in energy efficiency,” said Anthony Malkin, Managing Director of Empire State Realty Trust. Rents there start at $ 50 a foot, rather than triple digits like most new buildings, he said.
It’s not just the giant towers that are gaining ground. Myers says the small buildings in the store are “on fire.”
Kerry Powers, vice president of asset management at Savanna, said they have “good momentum” and a lot of interest in their properties, most notably boutique 106 W. 56th St. aka “The Six”.
This 26-story building exudes an atmosphere of hotel-like hospitality to its lobby, lounge and lower-level conference center. The floors are less than 5,000 square feet, some have private terraces, and all have bathrooms and upscale amenities such as upholstered leather on the elevator lobby walls.
Rents charged range from $ 100 to $ 180 per foot at the top. CBRE’s leasing agent Peter Turchin signed another full floor lease in mid-October to add to his three other completed deals. “The simple advice [to attract tenants] is spending money on your building and having good halls, good HVAC system and good equipment – at the end of the day, it’s not that complicated, ”Myers said.
Part of that rental dynamic is due to growing companies like Cockroach Labs, which sublet 64,516 square feet of Peloton to the reinvented 125 W. 25th St., now owned by the Switzerland-based AFIAA Foundation for international real estate investment and has “only” increased by 281.5%, Newmark found.
Other producers include TikTok, which occupied 232,138 square feet of space at the Durst Organization’s 151 W. 42nd St., a growth of 2,221.4%; DailyPay’s 137,274 square foot sublet to S&P Global at 55 Water St. was 1,139% larger than its current location at 55 Broad St .; while Freshly, which was acquired by Nestlé, signed for 1,403% more space in its 92,306 square foot move to 28 E. 28th St. from Loeb Partners, aka 63 Madison Ave.
Many large office occupants are also advising their employees that they expect them to return to their desks in the coming months, with each industry monitoring what executives are doing before presenting options to their own employees.
“Business leaders in most companies believe in the office environment and want to come back – whether it’s five days a week or a hybrid model,” said Josh Wein of RAL Development, who finishes Zero Irving at 124 E. . 14th St.
Most commercial real estate executives have worked in offices and shown spaces for much of 2021. According to Kastle Systems, law firms have 49.6% of their employees already in the office, up from 31.2. % for all industries in the city – and sting other employees to return to where they once belonged.
“The [law firms] are more eager to come back because it’s a real business in person and there is so much mentoring and collaboration going on and it’s hard to duplicate that at home and on Zoom, ”said Matt Barlow, VP from Savills.
On recent property visits, Jonathan Bock of Olmstead Properties said he was pleasantly surprised to show the space “and see people working at their desks”.