New York’s nosebleed office rents just got pricier with both more deals and more buildings sharing the wealth.
The city had 97 leases signed last year at rents $100 and higher per square foot, compared to 91 at the market peak in 2008.
These trophy towers had a vacancy rate of just 4.1 percent above the 25th floor in 2014, down from 5 percent in 2013 — thus making it hard to find such space and raising rents, according to a new report by JLL’s Cynthia Wasserberger.
“We have surpassed the peak,” declared Wasserberger.
Those tenants willing to pay to play at these 33 prestigious buildings — up from just 27 buildings with rents in excess of $100 a square foot in 2013 — included 32 hedge funds, 19 private equity firms, 25 other financial services firms and 21 in law, consulting or software.
While at $210 per square foot, Sheldon Solow’s 9 W. 57th St. still touts the highest starting rent, RFR Holding’s 375 Park Ave. has, since 2010, bagged the most deals — with 14 in 2014 compared to 13 in 2013.
After 9 W. 57th, the chart-topping rents belong to 767 Fifth, at $185 per square foot, which also had a renewal deal that starts in 2025 at a rent of $220; 667 Madison at $185; 375 Park at $165; and 450 Park at $145.
While all of these best buildings had traditionally been in Midtown’s Plaza District, for the first time Midtown South saw four buildings ink deals at more than $100 per square foot: 635 Sixth Ave.; 610 Broadway at Canal Street; the new 837 Washington St. in the Meatpacking District; and the new 51 Astor Place at East 8th Street, which signed four leases from $100 to $110 per square foot, Wasserberger said.
Although pricey rents have traditionally been paid for less than 20,000 square feet, three whopping renewals were signed ranging from 350,000 to 489,495 square feet.
These high-priced rents don’t kick in until 2019 and 2020. “They are typically transacting four or five years in advance,” said Wasserberger. “They also obtained concessions to spruce up their space today.”
By then, we may or may not agree that they got a bargain back in 2014.
Future turnover on West 34th Street is already driving rents upward.
We hear that makeup giant Sephora signed a deal for 11,300 square feet at 112 W. 34th St., which Foot Locker won’t vacate until 2016. The space once housed Woolworth & Co. and is directly opposite Macy’s.
The all-ground-floor deal was done at close to $1,000-per-ground-square-foot rent — likely the highest rent obtained ever on West 34th Street, sources tell us.
Empire State Realty Trust now has 89,000 retail feet left to rent at No. 112 with just 8,000 feet on the ground, and the remainder on the lower and upper levels.
Virginia Pittarelli of Crown Retail Services represented Sephora while Joanne Podell and Ian Lerner of Cushman & Wakefield represented the real estate investment trust named after its Empire State Building centerpiece.
No one returned requests for comment.
Joseph Sitt’s Thor Equities snagged one more tenant for 680 Madison Ave.
Luxury eyewear shop Morgenthal Frederics will have a boutique-sized 650 square feet between 61st and 62nd streets, but a big 18 feet of frontage.
The glamour accessory shop will open in the spring and was represented by Richard Hodos and Dan Alesandro of CBRE.
The asking rent was $2,200 per square foot, one of the highest on that stretch of Madison.
Sitt is redeveloping the 38,000 square feet of retail on two floors under the luxury apartment renovation of the former Carlton House by Gary Barnett’s Extell Development.
A year ago, Qela signed for 6,230 square feet and has yet to open. More deals are coming soon, sources said.
McGraw Hill Financial’s Chairman Harold “Terry” McGraw is going through a separation. The financial information company, which has long been located in its namesake tower at 1221 Sixth Ave., is moving to 55 Water St. later this year.
In preparation for that move, however, McGraw Hill Financial has leased 8,000 square feet for what we hear will be McGraw’s personal offices in the adjacent 53-story 1251 Ave. of the Americas, sources said.
The prebuilt shares the “beautiful” 34th floor with the global advisory group Rothschild, which boasts an interconnecting additional full floor of space. McGraw’s lease ends after 7½ years.
Paul Myers and Michael Liss of CBRE represented McGraw Hill. The team of David Falk and Peter Shimkin of Newmark Grubb Knight Frank represented the building. All the company spokes-folk declined comment.
McGraw was bumped from CEO to chairman and repurchased his $60 million private jet for $20 million as part of company-wide measures to reduce overhead.
Leon Charney is rebranding 1441 Broadway at the West 41st Street crossroads of Broadway and Seventh Avenue as 10 Times Square.
To bump up its profile and aid in leasing, he is investing in both wrap and corner LED signage as well as new glass for its two stories of retail.
Kenneth Hochhauser and Kelly Gedinsky of Winick Realty Group are leading the retail leasing for all 56,000 square feet.
The signage runs up to 145 feet and can be seen from many north Bow-Tie areas of Times Square. It can also be programmed to match the tenant’s branding, Hochhauser said.
So while its market asking rents are low for the area at $700 a square foot on the ground, sources said, it will be mandatory for any tenant to lease at least one sign. It will be turnkey, however, and allow re-letting.
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