The biggest lease of the year is done – and it’s momentous good news for a limping office-leasing market in a city beleaguered by the coronavirus.
Facebook on Monday closed on a long-awaited deal for 730,000 square feet at Vornado’s Farley Building, the former post office site between Madison Square Garden and the Hudson Yards district.
The publicly-traded social media giant and real estate powerhouse were in discussions since last year. But skeptics doubted Facebook would go ahead with the NYC expansion in the midst of the coronavirus crisis. Facebook’s Mark Zuckerberg himself struck a sour note when he predicted in May that half of his employees would work from home within a few years.
It didn’t help matters when the deal dragged on well beyond a hoped-for completion date by Memorial Day.
Now that it’s done, Facebook’s commitment should give pause to endless chatter that central office districts will never recover from the COVID pandemic.
CBRE tristate CEO Mary Ann Tighe, who wasn’t involved in the Farley negotiations, called Vornado chairman Steven Roth and his firm’s New York president David Greenbaum and leasing head Glen Weiss “our city’s heroes today.”
She said, “Despite all the work-from-home chatter and the nonsense about big cities being devalued, one of the world’s tech giants chose to go long — indeed, in combination with Hudson Yards [where Facebook also has space], go longer — on New York City and work-from-work.
“It’s proof, for those who always seem to need it, that our city remains a magnet for talent.”
The Farley Building is part of Vornado’s $2 billion investment in the Penn District, where it owns 10 million square feet of space. The Beaux Arts-style landmark takes up the entire superblock bounded by Eighth and Ninth avenues between West 31st and 33rd streets.
In addition to the Facebook floors, the building will contain a new Moynihan Train Hall plus 120,000 square feet of store and restaurant space. The whole project is to be completed by the end of 2020.
Vornado’s Roth said Facebook’s move “is a further testament to New York City’s extraordinary talent and reinforces New York’s position as the nation’s second tech hub” after Silicon Valley.
Facebook vice-president of real estate Robert Cookson noted that Facebook “will further anchor our New York footprint.” The company also has more than 1.5 million square feet at Related Companies’ Hudson Yards and additional space at Vornado’s 770 Broadway.
The Midtown office market has counter-intuitively shown strength over the past two months despite a miserably slow second quarter.
Other large recent deals include AIG for 325,000 square feet at 1271 Sixth Ave., TikTok for 230,000 square feet at One Five One, formerly known as Four Times Square, and Raymond James for 160,000 square feet at 320 Park Ave.