We hate to puncture the doom-and-gloom bubble — it’s such fun to read about the inevitable collapse of the city’s office market — but allow us an upbeat column, full of happy and hopeful tidings all around.
Let’s start with One Vanderbilt, SL Green’s all-but-completed cloudbuster next to Grand Central Terminal. Since the start of the pandemic, the $1.7 billion, 1,401-foot-tall skyscraper where office rents are among the city’s highest has raised its pre-opening tenancy from 65 percent in February to 70 percent, SL Green president Andrew Mathias told us on Monday. Financial firm Oak Hill added to its original commitment and two small private-equity firms signed new leases.
Mathias said the ribbon-cutting is likely to be held on Sept. 14 or 15, by which time SL Green’s newly created public plaza between the tower and the terminal “will be fully operational,” along with $200 million in improved transit and pedestrian amenities which the developer agreed to provide.
Office rents at One Vanderbilt range from $125 to $300 per square foot, according to an investor presentation in December.
Way downtown, the Seaport District has looked dead of late, lacking tourists, office workers — and restaurants. But Howard Hughes Corp., which runs the seaport under a lease with the city, says things are cooking again on Pier 17 — literally.
Malibu Farm reopened last week. On the pier roof, The Greens is also up and running. It boasts 28 canopied “mini-lawns” with lawn chairs that promise the “ultimate social distancing” and features a light menu and cocktails.
David Chang’s new Ssam Bar outdoor patio is due by the end of this month, Howard Hughes spokesman James Yolles said. Andrew Carmellini’s casual Mr. Dips is on track to open soon.
Jean-Georges Vongerichten’s massive Fulton restaurant has been undergoing renovations that are to be completed this month, with outdoor seating expected to follow soon after.
And the Seaport’s largest new project, Vongerichten’s 40,000-square-foot food hall inside the landmarked and slightly relocated Tin Building, is due in 2021.
The office market shows reassuring signs of life since the grim second quarter, Manhattan’s slowest since 2009. Not including renewals, it was “the worst quarter we have ever recorded,” according to CBRE.
It’s no surprise in the midst of the COVID-19 pandemic and given that “everybody” will soon work from home. Didn’t Mark Zuckerberg himself say that Facebook employees wouldn’t return to their offices until mid-2021?
But there’s a disconnect between short-term, crisis-driven strategies and the longer term. Most CEOs — Zuckerberg included — clearly believe that even this most terrible of crises has a finite duration.
Facebook’s lease for 780,000 square feet last week at Vornado’s Farley Building comes on top of the millions of square feet it already has in Manhattan including at Hudson Yards.
Several other notable large deals have recently been completed. Late in the second quarter, TikTok signed for 230,000 square feet at the Durst Organization’s One Five One (the deal has closed so it’s likely unaffected by a possible TikTok sale).
Since the start of the third quarter, AIG took 325,000 square feet at Rockefeller Group’s 271 Sixth Ave. and 220,000 square feet at Fosun’s 28 Liberty St. Raymond James took 160,000 square feet at Mutual of America’s 320 Park Ave. Meanwhile, we’re told that IBM is hunting more space of up to 100,000 square feet at various locations.
How can there be so much activity? BRE research director Nicole LaRusso said, “While there is a great deal of uncertainty in the horizon, major occupiers still see themselves maintaining a sizable office presence in Manhattan, and feel optimistic about their business prospects in the city to move ahead with significant new commitments.”
What about rental apartment values? Isn’t everyone fleeing to the suburbs? KKR is teaming up with Dalan Management to buy a Brooklyn apartment complex in a deal valued at over $800 million — not exactly a no-confidence vote.
On the retail front, Ted’s Montana Grill just renewed on its 6,100-square-foot outpost at 1271 Sixth Ave. — this in the heart of what’s now a sleepy Midtown office corridor. The steakhouse co-founded by Ted Turner has been at the West 51st Street corner since 2006.
A few blocks away, luxury jeweler Chopard leased a 2,500-square-foot retail space at the Crown Building at Fifth Avenue and 57th Street.
None of this means the commercial market’s fully on the mend. There are going to be more bankruptcies, broken leases and ruined companies. Landlords, brokers and the lawyers and accountants who serve them will be losing sleep for a long time to come.
But it does suggest that end-of-the-world scenarios are wildly overblown — just as all prior predictions of the Big Apple’s demise have been.