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Hedge Funds Play the Leasing Market

NEW YORK CITY-The boutique hedge fund sector's search for office space deals is focused on a handful of trophy Midtown properties.

By Paul Bubny | Updated on May 26, 2010

NEW YORK CITY-A hedge fund index can measure a variety of metrics, such as monthly or weekly performance. In the case of the index introduced this week by Jones Lang LaSalle, it tracks asking rents at trophy Midtown office towers favored by this class of financial services tenants. Given that the hedge fund industry favors properties in the Plaza District, it’s not surprising that the low mark of the index is higher than average ask across Midtown, even as hedge fund tenants shop for opportunities.

JLL’s analysis of hedge fund leases completed between 2007 and 2009 found that the sector gravitates toward 21 Midtown properties, including 375 Park Ave. and 9 W. 57th St., although deals were also done in the Financial District. Solow’s iconic 9 W. 57th sets the high watermark for asking rents in New York at $180 per square foot.

At 375 Park, which is seen as a bellwether for trophy properties due to its high volume of completed deals, asking rents range as high as $120 per square foot, as they do at 590 Madison Ave. “As confidence in the market increases approaching the mid-year point in 2010, 375 Park will have raised asking rents three times, with many of its competitors following suit,” JLL’s Cynthia Wasserberger writes in the report.

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